Revision of the Commission's Program Access Rules.
Attachments
Federal Communications Commission
FCC 12-123
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of)
)
Revision of the Commission’s Program Access
)
MB Docket No. 12-68
Rules
)
)
News Corporation and The DIRECTV Group, Inc., )
MB Docket No. 07-18
Transferors, and Liberty Media Corporation,
)
Transferee, for Authority to Transfer Control
)
)
Applications for Consent to the Assignment
)
MB Docket No. 05-192
and/or Transfer of Control of Licenses, Adelphia
)
Communications Corporation (and subsidiaries,
)
debtors-in-possession), Assignors, to Time
)
Warner Cable Inc. (subsidiaries), Assignees, et al.
)
)
Implementation of the Cable Television Consumer
)
MB Docket No. 07-29
Protection and Competition Act of 1992
)
)
Development of Competition and Diversity
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in Video Programming Distribution:
)
Section 628(c)(5) of the Communications Act:
)
)
Sunset of Exclusive Contract Prohibition
)
REPORT AND ORDER IN MB DOCKET NOS. 12-68, 07-18, 05-192
FURTHER NOTICE OF PROPOSED RULEMAKING IN MB DOCKET NO. 12-68
ORDER ON RECONSIDERATION IN MB DOCKET NO. 07-29
Adopted: October 5, 2012
Released: October 5, 2012
Comment Date:
[30 days after date of publication in the Federal Register]Reply Comment Date: [45 days after date of publication in the Federal Register]
By the Commission: Chairman Genachowski and Commissioners Clyburn, Rosenworcel and Pai issuingseparate statements; Commissioner McDowell approving in part, concurring in part
and issuing a statement.
TABLE OF CONTENTS
HeadingParagraph #
I.
INTRODUCTION .................................................................................................................................. 1
II. REPORT AND ORDER IN MB DOCKET NOS. 12-68, 07-18, 05-192 .............................................. 7
A. Background ...................................................................................................................................... 7
B. Discussion ...................................................................................................................................... 11
1. Expiration of the Exclusive Contract Prohibition.................................................................... 12
a. Standard of Review........................................................................................................... 12
b. Analysis............................................................................................................................. 14
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(i) Incentive ..................................................................................................................... 16(ii) Ability......................................................................................................................... 22
(iii) Conclusion.................................................................................................................. 31
c. Additional Factors Weighing in Favor of Expiration of the Exclusive Contract
Prohibition......................................................................................................................... 35
d. Impact of the Expiration of the Exclusive Contract Prohibition on Competition
and Consumers.................................................................................................................. 41
e. Alternatives to Expiration of the Exclusive Contract Prohibition..................................... 47
2. Case-by-Case Complaint Process............................................................................................ 51
a. Section 628(b) Complaints................................................................................................ 52
(i) Procedures for Challenging Exclusive Contracts Involving Satellite-
Delivered, Cable-Affiliated Programming Pursuant to Section 628(b)...................... 52
(ii) 45-day Answer Period ................................................................................................ 59
b. Section 628(c)(2)(B) Discrimination Complaints............................................................. 60
c. Deadline for Media Bureau Action on Complaints Alleging a Denial of
Programming..................................................................................................................... 63
d. Petitions for Exclusivity.................................................................................................... 65
e. First Amendment .............................................................................................................. 66
C. Subdistribution Agreements........................................................................................................... 70
D. Common Carriers and Open Video Systems ................................................................................. 71
E. Liberty Media Order Merger Conditions....................................................................................... 72
III. FURTHER NOTICE OF PROPOSED RULEMAKING IN MB DOCKET NO. 12-68 ..................... 74
A. Rebuttable Presumptions for Cable-Affiliated RSNs..................................................................... 74
1. Rebuttable Presumption that an Exclusive Contract for a Cable-Affiliated RSN is an
“Unfair Act” ............................................................................................................................ 75
2. Rebuttable Presumption that a Complainant Challenging an Exclusive Contract
Involving a Cable-Affiliated RSN is Entitled to a Standstill................................................... 78
B. Other Rebuttable Presumptions...................................................................................................... 80
1. Rebuttable Presumptions for Exclusive Contracts Involving Cable-Affiliated National
Sports Networks ...................................................................................................................... 80
2. Rebuttable Presumption for Previously Challenged Exclusive Contracts............................... 81
C. Buying Groups ............................................................................................................................... 82
1. Definition of “Buying Group”................................................................................................. 83
2. Participation of Buying Group Members in Master Agreements............................................ 91
3. Standard of Comparability for Buying Groups Regarding Volume Discounts....................... 95
IV. ORDER ON RECONSIDERATION IN MB DOCKET NO. 07-29.................................................. 101
A. Background .................................................................................................................................. 101
B. Discussion .................................................................................................................................... 103
V. PROCEDURAL MATTERS.............................................................................................................. 110
A. Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192 and Order on
Reconsideration in MB Docket No. 07-29................................................................................... 110
1. Final Regulatory Flexibility Act Analysis............................................................................. 110
2. Final Paperwork Reduction Act of 1995 Analysis ................................................................ 111
3. Congressional Review Act .................................................................................................... 112
B. FNPRM in MB Docket No. 12-68 ............................................................................................... 113
1. Initial Regulatory Flexibility Act Analysis ........................................................................... 113
2. Paperwork Reduction Act...................................................................................................... 114
3. Ex Parte Rules ....................................................................................................................... 115
4. Filing Requirements .............................................................................................................. 116
VI. ORDERING CLAUSES..................................................................................................................... 120
A. Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192 and Order on
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Reconsideration in MB Docket No. 07-29................................................................................... 120B. FNPRM in MB Docket No. 12-68 ............................................................................................... 127
APPENDIX A - List of Commenters in MB Docket Nos. 12-68, 07-18, and 05-192
APPENDIX B - List of Parties in MB Docket No. 07-29
APPENDIX C - Final Rules
APPENDIX D - Restated Final Rules Showing Changes Adopted
APPENDIX E - Nationwide MVPD Subscribership
APPENDIX F - Satellite-Delivered, Cable-Affiliated, National Programming Networks
APPENDIX G - Cable-Affiliated, Regional Sports Networks
APPENDIX H - Potential Amendments to the Program Access Rules Based on the FNPRM
APPENDIX I - Standard Protective Order and Declaration for Use in Section 628 Program
Access Proceedings
APPENDIX J - Final Regulatory Flexibility Act Analysis
APPENDIX K - Initial Regulatory Flexibility Act Analysis
I.
INTRODUCTION
1.In this Report and Order, we decline to extend the exclusive contract prohibition section
of the program access rules beyond its October 5, 2012 sunset date.1 This prohibition generally bans
exclusive contracts for satellite cable programming or satellite broadcast programming between any cable
operator and any cable-affiliated programming vendor in areas served by a cable operator.2 The
prohibition applies only to programming that is delivered via satellite; it does not apply to programming
delivered via terrestrial facilities.3 Congress directed the Commission to adopt this prohibition in 1992
when cable operators served more than 95 percent of all multichannel video subscribers and were
affiliated with over half of all national cable networks.4 In expectation that competition in the video
programming and distribution markets would develop, Congress provided that the exclusive contract
prohibition would expire on October 5, 2002, unless the Commission found that it “continue[d] to be
necessary to preserve and protect competition and diversity in the distribution of video programming.”5
On two previous occasions, first in 20026 and again in 2007,7 the Commission renewed the prohibition for
1 See 47 U.S.C. § 548(c)(2)(D); 47 C.F.R. § 76.1002(c)(2).
2 An exclusive contract results in one cable operator having access to a particular cable-affiliated programming
network or networks in a given geographic area, to the exclusion of every other multichannel video programming
distributor (“MVPD”) competing in that geographic area.
3 The exclusive contact prohibition in Section 628(c)(2)(D) pertains only to “satellite cable programming” and
“satellite broadcast programming.” See 47 U.S.C. § 548(c)(2)(D). Both terms are defined to include only
programming transmitted or retransmitted by satellite for reception by cable operators. See 47 U.S.C. § 548(i)(1)
(incorporating the definition of “satellite cable programming” as used in 47 U.S.C. § 605); id. § 548(i)(3). In this
Order, we refer to “satellite cable programming” and “satellite broadcast programming” collectively as “satellite-
delivered programming.” In January 2010, the Commission adopted rules providing for the processing of
complaints alleging that an “unfair act” involving terrestrially delivered, cable-affiliated programming violates
Section 628(b) of the Act. See Review of the Commission’s Program Access Rules and Examination of
Programming Tying Arrangements, First Report and Order, 25 FCC Rcd 746 (2010) (“2010 Program Access
Order”), affirmed in part and vacated in part sub nom. Cablevision Sys. Corp. et al. v. FCC, 649 F.3d 695 (D.C.
Cir. 2011) (“Cablevision II”).
4 See H.R. Rep. No. 102-628 (1992), at 41; Implementation of the Cable Television Consumer Protection and
Competition Act of 1992 – Development of Competition and Diversity in Video Programming Distribution: Section
628(c)(5) of the Communications Act: Sunset of Exclusive Contract Prohibition, Report and Order, 17 FCC Rcd
12124, 12132, ¶ 20 (2002) (“2002 Extension Order”).
5 47 U.S.C. § 548(c)(5).
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five years, with the latest extension expiring on October 5, 2012, thus extending the prohibition for tenyears beyond the original term established by Congress.
2.
We find that a preemptive prohibition on exclusive contracts is no longer “necessary to
preserve and protect competition and diversity in the distribution of video programming” considering that
a case-by-case process will remain in place after the prohibition expires to assess the impact of individual
exclusive contracts.8 In upholding the Commission’s last extension of the prohibition in 2007, the United
States Court of Appeals for the D.C. Circuit (“D.C. Circuit”) noted changes in the marketplace since 1992
and stated its expectation that if the market continued to evolve in this manner, “the Commission will
soon be able to conclude that the prohibition is no longer necessary to preserve and protect competition
and diversity in the distribution of video programming.”9 As discussed below, because the current market
presents a mixed picture (with the cable industry now less dominant at the national level than it was when
the exclusive contract prohibition was enacted, but prevailing concerns about cable dominance and
concentration in various individual markets), we find that extending a preemptive ban on exclusive
contracts sweeps too broadly. Rather, this mixed picture justifies a case-by-case approach in applying our
program access rules (consistent with the case-by-case inquiries we undertake in the terrestrial
programming and program carriage contexts), with special account taken of the unique characteristics of
Regional Sports Network (“RSN”) programming. In addition to allowing us to assess any harm to
competition resulting from an exclusive contract, this case-by-case approach will also allow us to
consider the potentially procompetitive benefits of exclusive contracts in individual cases, such as
promoting investment in new programming, particularly local programming, and permitting MVPDs to
differentiate their service offerings. Accordingly, consistent with Congress’s intention that the exclusive
contract prohibition would not remain in place indefinitely and its finding that exclusive contracts can
have procompetitive benefits in some markets, we decline to extend the preemptive prohibition beyond its
October 5, 2012 sunset date.
3.
We recognize that the potential for anticompetitive conduct resulting from vertical
integration between cable operators and programmers remains a concern. For example, in some markets,
vertical integration may result in exclusive contracts between cable operators and their affiliated
programmers that preclude competitors in the video distribution market from accessing critical
programming needed to attract and retain subscribers and thus harm competition. While the amount of
satellite-delivered, cable-affiliated programming among the most popular cable networks has declined
since 2007, some of that programming may still be critical for MVPDs to compete in the video
distribution market. Congress has provided the Commission with the authority to address exclusive
contracts on a case-by-case basis. We thus conclude that, in the context of present market conditions,
such an individualized assessment of exclusive contracts in response to complaints is a more appropriate
regulatory approach than the blunt tool of a prohibition that preemptively bans all exclusive contracts
between satellite-delivered, cable-affiliated programmers and cable operators. This case-by-case
consideration of exclusive contracts involving satellite-delivered, cable-affiliated programming will
mirror our treatment of terrestrially delivered, cable-affiliated programming, including the establishment
of a rebuttable presumption that an exclusive contract involving a cable-affiliated RSN has the purpose or
effect prohibited in Section 628(b) of the Act. As demonstrated by our recent actions on complaints
6 See 2002 Extension Order, 17 FCC Rcd 12124.
7 See Implementation of the Cable Television Consumer Protection and Competition Act of 1992 – Development of
Competition and Diversity in Video Programming Distribution: Section 628(c)(5) of the Communications Act:
Sunset of Exclusive Contract Prohibition, Report and Order, 22 FCC Rcd 17791 (2007) (“2007 Extension Order”),
aff’d sub nom. Cablevision Sys. Corp. et al. v. FCC, 597 F.3d 1306 (D.C. Cir. 2010) (“Cablevision I”).
8 47 U.S.C. § 548(c)(5).
9 Cablevision I, 597 F.3d at 1314.
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involving withholding of terrestrially delivered, cable-affiliated programming, the Commission iscommitted to exercising its authority under Section 628 of the Act to require cable-affiliated programmers
to license their programming to competitors in appropriate cases.10
4.
In addition to case-by-case adjudication, we expect that additional factors will mitigate
the risk of any potentially adverse impact of the expiration of the exclusive contract prohibition on
consumers and competition. First, approximately 30 satellite-delivered, cable-affiliated, national
networks (accounting for 30 percent of all such networks) and 14 satellite-delivered, cable-affiliated,
RSNs (accounting for over 40 percent of all such RSNs) are subject to program access merger conditions
adopted in the Comcast/NBCU Order until January 2018.11 These conditions require Comcast/NBCU to
make these networks available to competitors, even after the expiration of the exclusive contract
prohibition.12 Second, the record indicates that existing affiliation agreements between programmers and
10 See Verizon Tel. Cos. et al., Order, 26 FCC Rcd 13145 (MB 2011) (concluding that withholding the MSG HD and
MSG+ HD RSNs from Verizon is an “unfair act” that has the “effect” of “significantly hindering” Verizon from
providing satellite cable programming and satellite broadcast programming to subscribers and consumers in New
York and Buffalo) (“Verizon v. MSG/Cablevision (Bureau Order)”), affirmed, Verizon Tel. Cos. et al., Memorandum
Opinion and Order, 26 FCC Rcd 15849 (2011) (“Verizon v. MSG/Cablevision (Commission Order)”); AT&T Servs.
Inc. et al., Order, 26 FCC Rcd 13206 (MB 2011) (reaching the same conclusion with respect to AT&T in the State of
Connecticut) (“AT&T v. MSG/Cablevision (Bureau Order)”), affirmed, AT&T Servs. Inc. et al., Memorandum Opinion
and Order, 26 FCC Rcd 15871 (2011) (“AT&T v. MSG/Cablevision (Commission Order)”), appeal pending sub nom.
Cablevision Sys. Corp. et al. v. FCC, No. 11-4780 (2nd Cir.). In addition, where vertical integration occurs as a result
of a transaction involving the transfer of Commission licenses, we have authority under Section 310(d) to impose
conditions that address potential competitive harms that might result from such integration. See, e.g., Applications of
Comcast Corporation, General Electric Company and NBC Universal, Inc. For Consent to Assign Licenses and
Transfer Control of Licensees, Memorandum Opinion and Order, 26 FCC Rcd 4238 (2011) (“Comcast/NBCU
Order”).
11 See infra ¶ 24 and Appendices F-G.
12 These conditions provide that, if “negotiations fail to produce a mutually acceptable set of price, terms, and
conditions” for a carriage agreement with one or more Comcast-controlled networks (see infra n.89), an MVPD or
bargaining agent may “submit [the] dispute to commercial arbitration.” Comcast/NBCU Order, 26 FCC Rcd at
4259-62, ¶¶ 49-59 and 4358, Condition II. Each party is required to submit a “final offer . . . in the form of a
contract for carriage” for a period of three years. Id. at 4365, Condition VII.A.13. The arbitrator must “choose the
final offer of the party which most closely approximates the fair market value of the programming carriage rights at
issue.” Id. at 4366, Condition VII.B.4. Following the decision of the arbitrator, “the parties shall be bound by the
final offer chosen by the arbitrator.” Id. at 4367, Condition VII.B.11; see also id. at 4364, Condition VII.A.1
(stating that the arbitration will “determine the terms and conditions of a new agreement”). By requiring Comcast-
controlled networks to enter into arbitration with a requesting MVPD to determine the price, terms, and conditions
of a new carriage agreement, these conditions require Comcast-controlled networks to make their programming
available to all requesting MVPDs and thus preclude any Comcast-controlled network from enforcing an exclusive
contract, including in regions where Comcast does not operate its cable systems. See id. at 4261, ¶ 55 (explaining
that these conditions apply to the benefit of all MVPDs, “not just those that compete directly with Comcast”); see
also Comments of The Madison Square Garden Company (June 22, 2012), at 12 (stating that expiration of the
exclusive contract prohibition will have no impact on the availability of Comcast networks that will continue to be
subject to program access provisions in the Comcast/NBCU Order); Comments of Time Warner Cable Inc. (June 22,
2012), at 8 (“TWC Comments”) (stating that Comcast-controlled networks “would be subject to program access
requirements regardless of the action taken by the Commission in this proceeding and should thus be ignored in this
analysis”).
Our decision to decline to extend the exclusive contract prohibition beyond its sunset date does not impact our
analysis in the Comcast/NBCU Order concluding that these conditions were necessary to curb Comcast’s
anticompetitive exclusionary program access strategies that might result from the transaction. In that proceeding,
based on an extensive factual record in the context of an adjudication, the Commission found MVPDs would be
“substantially harm[ed]” without Comcast-NBCU’s suite of local, regional, and national programming, and that an
(continued….)
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MVPDs require programming covered by the agreement to be made available for the term of the existingagreement despite the expiration of the exclusive contract prohibition. This effectively defers the period
that exclusive contracts will begin to be enforced and thus minimizes any potential disruption to
consumers that could result from the expiration of the prohibition. Third, in addition to claims under
Section 628(b) of the Act, additional causes of action under Section 628 will continue to apply after
expiration of the exclusive contract prohibition, including claims alleging undue influence under Section
628(c)(2)(A) and claims alleging discrimination under Section 628(c)(2)(B).13 In particular, nothing in
our decision today will alter our treatment of selective refusals to license, whereby a satellite-delivered,
cable-affiliated programmer refuses to license its content to a particular MVPD (such as a new entrant or
satellite provider) while simultaneously licensing its content to other MVPDs competing in the same
geographic area.14 Even after the expiration of the exclusive contract prohibition, such conduct will
remain a violation of the discrimination provision in Section 628(c)(2)(B) of the Act, unless the cable-
affiliated programmer can establish a legitimate business reason for the conduct in response to a program
access complaint challenging the conduct. Fourth, we will continue to monitor the video marketplace. If
the expiration of the exclusive contract prohibition, combined with future changes in the competitive
landscape, result in harm to consumers or competition, we have statutory authority pursuant to Section
628(b) of the Act to take remedial action by adopting rules to address such concerns.15
5.
We also take related actions herein to amend our rules pertaining to subdistribution
agreements, common carriers, and Open Video Systems (“OVS”) to reflect the expiration of the exclusive
contract prohibition. Further, we modify merger conditions pertaining to exclusive contracts adopted in
the Liberty Media Order to conform to our revised rules. In addition, we revise our procedural rules to (i)
provide for a 45-day answer period for all complaints alleging a violation of Section 628(b), regardless of
whether the complaint involves satellite-delivered or terrestrially delivered programming; and (ii)
establish a six-month deadline (calculated from the date of filing of the complaint) for the Media Bureau
to act on a complaint alleging a denial of programming.
6.
In the Further Notice of Proposed Rulemaking (“FNPRM”) in MB Docket No. 12-68, we
seek comment on whether to establish (i) a rebuttable presumption that an exclusive contract for a cable-
affiliated RSN (regardless of whether it is terrestrially delivered or satellite-delivered) is an “unfair act”
under Section 628(b); (ii) a rebuttable presumption that a complainant challenging an exclusive contract
involving a cable-affiliated RSN (regardless of whether it is terrestrially delivered or satellite-delivered) is
entitled to a standstill of an existing programming contract during the pendency of a complaint; (iii)
rebuttable presumptions with respect to the “unfair act” element and/or the “significant hindrance”
element of a Section 628(b) claim challenging an exclusive contract involving a cable-affiliated “national
sports network” (regardless of whether it is terrestrially delivered or satellite-delivered); and (iv) a
rebuttable presumption that, once a complainant succeeds in demonstrating that an exclusive contract
involving a cable-affiliated network (regardless of whether it is terrestrially delivered or satellite-
delivered) violates Section 628(b) (or, potentially, Section 628(c)(2)(B)), any other exclusive contract
involving the same network violates Section 628(b) (or Section 628(c)(2)(B)). We also seek comment in
the FNPRM on revisions to the program access rules to ensure that buying groups utilized by small and
medium-sized MVPDs can avail themselves of these rules. In the Order on Reconsideration in MB
Docket No. 07-29, we (i) affirm the expanded discovery procedures for program access complaints
adopted in the 2007 Extension Order; (ii) modify the standard protective order for use in program access
“anticompetitive exclusionary program access strategy would often be profitable for Comcast.” Comcast/NBCU
Order, 26 FCC Rcd at 4254, ¶ 37 (footnotes omitted) and 4257-58, ¶ 44.
13 See 47 U.S.C. §§ 628(c)(2)(A)-(B).
14 See 47 U.S.C. § 628(c)(2)(B).
15 See infra ¶ 25.
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complaint proceedings to include a provision allowing a party to object to the disclosure of confidentialinformation based on concerns about the individual seeking access; and (iii) clarify that a party may
object to any request for documents that are protected from disclosure by the attorney-client privilege, the
work-product doctrine, or other recognized protections from disclosure.
II.
REPORT AND ORDER IN MB DOCKET NOS. 12-68, 07-18, 05-192
A.
Background
7.An extensive background regarding the program access rules in general and the exclusive
contract prohibition in particular is provided in the Notice of Proposed Rulemaking (“NPRM”), which we
incorporate herein by reference and do not repeat at length.16 In areas served by a cable operator, Section
628(c)(2)(D) generally prohibits exclusive contracts for satellite cable programming or satellite broadcast
programming between any cable operator and any cable-affiliated programming vendor.17 The exclusive
contract prohibition applies to all satellite-delivered, cable-affiliated programming and preemptively bans
all exclusive contracts for such programming with cable operators, regardless of whether the withholding
of particular programming would impact competition in the marketplace.18 As mentioned above, the
exclusive contract prohibition applies only to programming that is delivered via satellite; it does not apply
to programming that is delivered via terrestrial facilities.19 Under the statute and our implementing rules,
an exclusive contract is permissible if a cable operator or cable-affiliated programmer obtains prior
approval by demonstrating to the Commission that the contract serves the public interest.20 Congress thus
16 See Revision of the Commission’s Program Access Rules et al., Notice of Proposed Rulemaking, 27 FCC Rcd 3413,
3417-23, ¶¶ 6-16 (2012) (“NPRM”).
17 See 47 U.S.C. § 548(c)(2)(D). The Commission has implemented this provision through Section 76.1002(c)(2) of
the rules. See 47 C.F.R. § 76.1002(c)(2). In unserved areas, Congress adopted a per se prohibition on exclusive
contracts between cable operators and satellite-delivered, cable-affiliated programmers. 47 U.S.C. § 548(c)(2)(C).
Unlike the exclusive contract prohibition in served areas, the exclusive contract prohibition in unserved areas is not
subject to a sunset provision and is unaffected by this Order.
18 See Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of
1992: Development of Competition and Diversity in Video Programming Distribution and Carriage, First Report
and Order, 8 FCC Rcd 3359, 3377-78, ¶¶ 47-49 (1993) (“1993 Program Access Order”); see also Implementation of
Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of 1992: Development of
Competition and Diversity in Video Programming Distribution and Carriage, Memorandum Opinion and Order on
Reconsideration of the First Report and Order, 10 FCC Rcd 1902, 1930, ¶ 62 (1994) (“1994 Program Access
Order”).
19 See supra ¶ 1.
20 To enforce or enter into an exclusive contract in a served area, a cable operator or a satellite-delivered, cable-
affiliated programmer must submit a “Petition for Exclusivity” to the Commission for approval. See 47 U.S.C. §
548(c)(2)(D), (c)(4); see also 47 C.F.R. § 76.1002(c)(2), (c)(4), (c)(5); 2002 Extension Order, 17 FCC Rcd at 12154,
n.206 (“While Section 628(c)(2)(D) remains in effect, exclusive contracts generally are prohibited unless the
Commission finds that exclusivity is in the public interest. The burden is placed on the party seeking exclusivity to
show that a specific exclusive contract meets the statutory public interest standard before any such contract can be
enforced.”) (citing 1993 Program Access Order, 8 FCC Rcd at 3384, ¶ 63 and 3386, ¶ 66); New England Cable
News Channel, Memorandum Opinion and Order, 9 FCC Rcd 3231, 3234-35, ¶ 24 (1994) (“[W]e must examine
whether the proponent of exclusivity has met its burden of demonstrating that the statutory presumption that the
public interest is served by requiring open access by emerging competing distributors to the programming at issue is
offset by countervailing public benefits derived from allowing exclusive agreements to create incentives for
investment in the development and distribution of services that will promote diversity in the programming market.”)
(“NECN Exclusivity Petition”).
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recognized that some exclusive contracts may serve the public interest by providing offsetting benefits tothe video programming market or assisting in the development of competition among MVPDs.21
8.
Congress also provided that the exclusive contract prohibition would sunset after ten
years (on October 5, 2002), unless the Commission found that it “continue[d] to be necessary to preserve
and protect competition and diversity in the distribution of video programming.”22 On two previous
occasions, first in 200223 and again in 2007,24 the Commission found that the prohibition remained
necessary and thus renewed it for an additional five-year term on each occasion, with the latest extension
expiring on October 5, 2012. In issuing the latest extension, the Commission recognized that “Congress
intended for the exclusive contract prohibition to sunset at a point when market conditions warrant” and
specifically “caution[ed] competitive MVPDs to take any steps they deem appropriate to prepare for the
eventual sunset of the prohibition, including further investments in their own programming.”25 The D.C.
Circuit upheld the Commission’s decision, characterizing the developments in the marketplace as a
“mixed picture” and deferring to the Commission’s analysis.26 The court expressed an expectation,
however, that at the next review “the Commission will weigh heavily Congress’s intention that the
exclusive contract prohibition will eventually sunset.” 27
9.
On March 20, 2012, the Commission adopted and released an NPRM initiating a third
review of the necessity of the exclusive contract prohibition.28 The NPRM presented data on the current
state of competition in the video distribution market and the video programming market and invited
commenters to submit more recent data or empirical analyses.29 The NPRM sought comment on whether
current conditions in the video marketplace support retaining, sunsetting, or relaxing the exclusive
contract prohibition.30 To the extent that the data might not support retaining the exclusive contract
prohibition as it exists today, the NPRM sought comment on whether the Commission could preserve and
protect competition in the video distribution market by either:
21 In determining whether a particular exclusive contract is in the public interest, Congress directed the Commission
to consider each of the following factors: (i) the effect of such exclusive contract on the development of competition
in local and national multichannel video programming distribution markets; (ii) the effect of such exclusive contract
on competition from multichannel video programming distribution technologies other than cable; (iii) the effect of
such exclusive contract on the attraction of capital investment in the production and distribution of new satellite
cable programming; (iv) the effect of such exclusive contract on diversity of programming in the multichannel video
programming distribution market; and (v) the duration of the exclusive contract. 47 U.S.C. § 548(c)(4); 47 C.F.R. §
76.1002(c)(4).
22 47 U.S.C. § 548(c)(5).
23 See 2002 Extension Order, 17 FCC Rcd 12124.
24 See 2007 Extension Order, 22 FCC Rcd 17791.
25 Id. at 17810, ¶ 29; see also Cablevision I, 597 F.3d at 1313 (“We trust that the Commission was sincere when it
explicitly anticipated that a market may develop in which exclusive programming could exist but not be harmful to
competition, and ‘caution[ed] competitive MVPDs to take any steps they deem appropriate to prepare for the
eventual sunset of the prohibition.’”) (quoting 2007 Extension Order, 22 FCC Rcd at 17810, ¶ 29).
26 See Cablevision I, 597 F.3d at 1313-14.
27 Id. at 1314.
28 See NPRM, 27 FCC Rcd 3413.
29 See id. at 3424-30, ¶¶ 21-29 and 3473-87, Appendices A-C. As discussed below, no commenter challenged the
accuracy of the data set forth in the NPRM. See infra ¶ 14.
30 See NPRM, 27 FCC Rcd at 3431-36, ¶¶ 31-43.
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·Sunsetting the exclusive contract prohibition in its entirety and instead relying on other existing
protections provided by the program access rules that will not sunset: (i) the case-by-case
consideration of exclusive contracts pursuant to Section 628(b) of the Act;31 (ii) the prohibition
on discrimination in Section 628(c)(2)(B) of the Act;32 and (iii) the prohibition on undue or
improper influence in Section 628(c)(2)(A) of the Act;33 or
·
Relaxing the exclusive contract prohibition by (i) establishing a process whereby a cable operator
or satellite-delivered, cable-affiliated programmer can seek to remove the prohibition on a
market-by-market basis based on the extent of competition in the market;34 (ii) retaining the
prohibition only for satellite-delivered, cable-affiliated RSNs and any other satellite-delivered,
cable-affiliated programming that the record establishes as being important for competition and
non-replicable and having no good substitutes;35 and/or (iii) other ways commenters propose.36
10.
In addition, the NPRM also sought comment on (i) how to implement a sunset (complete
or partial) to minimize any potential disruption to consumers;37 (ii) the First Amendment implications of
the alternatives discussed;38 (iii) the costs and benefits of the alternatives discussed;39 and (iv) the impact
of a sunset on our rules pertaining to subdistribution agreements, common carriers, and OVS, as well as
on existing merger conditions.40 The NPRM also sought comment on whether to make any changes to the
program access procedural rules41 and whether the Commission’s rules adequately address potentially
discriminatory volume discounts and uniform price increases and, if not, how these rules should be
revised to address these concerns.42
B.
Discussion
11.For the reasons discussed below, we decline to extend the exclusive contract prohibition
beyond its October 5, 2012 sunset date. First, we review marketplace developments since 2007 and
conclude that, because the current market presents a mixed picture (with the cable industry now less
dominant at the national level than it was when the exclusive contract prohibition was enacted, but
prevailing concerns about cable dominance and concentration in various individual markets), a
preemptive ban on exclusive contracts sweeps too broadly and is no longer “necessary to preserve and
protect competition and diversity in the distribution of video programming” considering that a case-by-
case process will remain in place after the prohibition expires to assess the impact of individual exclusive
31 See id. at 3438-44, ¶¶ 48-57.
32 See id. at 3444-48, ¶¶ 58-66.
33 See id. at 3448-49, ¶ 67.
34 See id. at 3449-52, ¶¶ 69-71.
35 See id. at 3452-56, ¶¶ 72-80.
36 See id. at 3449, ¶ 68.
37 See id. at 3456-58, ¶¶ 81-85.
38 See id. at 3459, ¶¶ 86-87.
39 See id. at 3460, ¶ 88.
40 See id. at 3460-65, ¶¶ 89-95.
41 See id. at 3466, ¶ 97.
42 See id. at 3466-69, ¶¶ 98-102. This Order in MB Docket No. 12-68 et al. addresses (i) the expiration of the
exclusive contract prohibition for satellite-delivered, cable-affiliated programming and associated rule changes
resulting from this expiration; and (ii) a 45-day Answer period for responding to a Section 628(b) complaint. This
Order does not address the other issues raised in the NPRM.
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contracts.43 Second, we describe the case-by-case process that will remain after sunset of the preemptiveban to address competitive harms that may arise in connection with exclusive contracts, including a 45-
day period for answering a Section 628(b) complaint and the establishment of a rebuttable presumption
that an exclusive contract involving a satellite-delivered, cable-affiliated RSN has the purpose or effect
prohibited in Section 628(b). We also explain how addressing exclusive contracts on a case-by-case basis
comports with the First Amendment. Third, we describe necessary amendments to our rules pertaining to
subdistribution agreements, common carriers, and OVS and to merger conditions pertaining to exclusive
arrangements adopted in the Liberty Media Order to reflect the expiration of the exclusive contract
prohibition.
1.
Expiration of the Exclusive Contract Prohibition
a.Standard of Review
12.Congress provided that the exclusive contract prohibition would expire on October 5,
2002, unless the Commission found that it continued to be “necessary” to preserve and protect
competition and diversity in the distribution of video programming.44 The Commission has previously
determined that the exclusive contract prohibition continues to be “necessary” if, in the absence of the
prohibition, competition and diversity in the distribution of video programming would not be preserved
and protected.45 The D.C. Circuit has upheld the Commission’s interpretation of the term “necessary”46
and has also ruled that the Commission’s analysis of the prohibition is appropriately focused on harm to
competition and consumers, not harm to competitors.47
13.
The Commission has also explained that the sunset provision “creates a presumption that
the rule will sunset” unless the Commission finds that it continues to be necessary.48 Moreover, the
Commission has explained that, because the exclusive contract prohibition has been in effect since 1992,
“it is difficult to obtain specific factual evidence of the impact on competition in the video distribution
market if the prohibition were lifted.”49 Accordingly, we rely on “economic theory and predictive
judgment[s] in addition to specific factual evidence in reaching our decision concerning the continued
need for the exclusive contract prohibition.”50
43 47 U.S.C. § 548(c)(5).
44 Id.
45 See 2007 Extension Order, 22 FCC Rcd at 17800-01, ¶ 13; 2002 Extension Order, 17 FCC Rcd at 12129-30, ¶ 14.
46 See Cablevision I, 597 F.3d at 1313 (stating that “[t]his interpretation is well within the Commission’s discretion
to interpret statutory language under Chevron”).
47 See id. (“Here, the Commission’s order discusses harm to consumers and competition that results from harm to
competitors, rather than incorrectly believing one harm to be equivalent to the other.”).
48 2002 Extension Order, 17 FCC Rcd at 12130-31, ¶ 16; see also TWC Comments at 10; Reply Comments of Time
Warner Cable Inc. (July 23, 2012), at 6-7 (“TWC Reply Comments”). Commenters’ suggestion that vertically
integrated cable operators bear the burden of demonstrating that the prohibition is no longer necessary finds no basis
in the statute. See, e.g., Comments of the Organization for the Promotion and Advancement of Small
Telecommunications Companies and the National Telecommunications Cooperative Association (June 22, 2012), at
5 (“OPASTCO/NTCA Comments”); Reply Comments of AT&T Inc. (July 23, 2012), at 3 (“AT&T Reply
Comments”).
49 2007 Extension Order, 22 FCC Rcd at 17801, ¶ 14; 2002 Extension Order, 17 FCC Rcd at 12135-36, ¶ 25.
50 2007 Extension Order, 22 FCC Rcd at 17801, ¶ 14.
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b.Analysis
14.In evaluating whether the exclusive contract prohibition continues to be necessary, the
Commission has previously examined data on the status of competition in the video programming market
and the video distribution market. The Commission presented extensive data in the NPRM on these
issues, which presented a mixed picture, and invited commenters to submit more recent data or empirical
analyses.51 While no commenter disputed the accuracy of the data presented in the NPRM, updated
information in the record requires some modifications to these data. In the discussion below and in
Appendix E, we present the most recent data available on the market shares of cable operators and other
MVPDs in the video distribution market, which differ only slightly from the data presented in the NPRM,
and continue to show a mixed picture.52 In addition, in the discussion below and in Appendices F and G,
we update the data presented in the NPRM on cable-affiliated networks to reflect (i) Comcast/NBCU’s
sale of its interest in A&E Television Networks, LLC (“A&E”);53 and (ii) information in the record
provided by Cablevision, Comcast, and Time Warner Cable (“TWC”) regarding their affiliation with
RSNs and whether those RSNs are satellite-delivered or terrestrially delivered.54
15.
Based on similar data and other record evidence, the Commission in past extension
decisions has analyzed whether, in the absence of the exclusive contract prohibition, cable-affiliated
programmers would have the incentive and the ability to harm competition and diversity in the
distribution of video programming by entering into exclusive contracts.55 We undertake the same analysis
here. Below, we consider the “incentive” element followed by the “ability” element.
(i)
Incentive
16.In evaluating whether cable-affiliated programmers retain the incentive to enter into
exclusive contracts, the Commission analyzes whether there continues to be an economic rationale for
exclusivity.56 The Commission has explained that, if a vertically integrated cable operator enters into an
exclusive arrangement for affiliated programming, it can recoup profits lost at the upstream level (i.e., lost
licensing fees and advertising revenues) by increasing the number of subscribers of its downstream
MVPD division.57 The Commission has also explained that, particularly where rival distributors are
limited in their market shares, a cable-affiliated programmer will be able to recoup a substantial amount
51 See NPRM, 27 FCC Rcd at 3424-30, ¶¶ 21-29 and 3473-87, Appendices A-C.
52 See infra Appendix E.
53 See infra Appendix F; see also Comcast Corporation, SEC Form 8-K (July 9, 2012); Reply Comments of Comcast
Corporation and NBCUniversal Media, LLC (July 23, 2012), at 5 (“Comcast Reply Comments”); Reply Comments
of National Cable & Telecommunications Association (July 23, 2012), at 6 (“NCTA Reply Comments”).
54 See infra Appendix G; see also Letter from Michael E. Olsen, Cablevision, to Marlene H. Dortch, Secretary, FCC,
MB Docket No. 12-68 et al. (July 11, 2012), at 1 (“Cablevision July 11th Letter”); Letter from James R. Coltharp,
Comcast Corporation, to Marlene H. Dortch, Secretary, FCC, MB Docket No. 12-68 et al. (July 11, 2012), at 2
(“Comcast July 11th Letter”); Letter from Matthew A. Brill, Counsel for Time Warner Cable Inc., to Marlene H.
Dortch, Secretary, FCC, MB Docket No. 12-68 et al. (July 11, 2012), at 2 (“TWC July 11th Letter”); Letter from
Matthew A. Brill, Counsel for Time Warner Cable Inc., to Marlene H. Dortch, Secretary, FCC, MB Docket No. 12-
68 et al. (August 31, 2012) (“TWC Aug, 31st Letter”).
55 See 2007 Extension Order, 22 FCC Rcd at 17810, ¶ 29; 2002 Extension Order, 17 FCC Rcd at 12130-31, ¶ 16.
56 See 2007 Extension Order, 22 FCC Rcd at 17820, ¶ 43; 2002 Extension Order, 17 FCC Rcd at 12139-40, ¶ 35.
57 See Applications for Consent to the Assignment and/or Transfer of Control of Licenses, Adelphia Communications
Corporation, Assignors to Time Warner Cable, Inc., Assignees, et al., Memorandum Opinion and Order, 21 FCC
Rcd 8203, 8256, ¶ 117 (2006) (“Adelphia Order”); see also 2007 Extension Order, 22 FCC Rcd at 17827-29, ¶ 53;
2002 Extension Order, 17 FCC Rcd at 12140, ¶ 36.
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of the revenues foregone by pursuing exclusivity.58 In the 2007 Extension Order, the Commissionconcluded that vertically integrated cable programmers retained the incentive to enter into exclusive
contracts for satellite-delivered programming.59
17.
As discussed below, the record here shows a mixed picture, indicating that vertically
integrated cable programmers may still have an incentive to enter into exclusive contracts for satellite-
delivered programming in many markets.60 As the Commission explained previously, the profitability of
exclusivity increases as the number of subscribers controlled by the vertically integrated cable operator
increases.61 In past extension decisions, the Commission has analyzed the aggregate market share of
cable operators on a national and regional basis to assess the profitability of exclusivity.62 In the 2007
Extension Order, the Commission found that the cable industry’s share of MVPD subscribers nationwide
had decreased since 2002 from 78 percent to approximately 67 percent, but that this market share was still
sufficient to make exclusivity a profitable strategy.63 Here, the record evidence indicates that the cable
industry’s share of MVPD subscribers nationwide has continued to decrease, from 67 percent in 2007 to
57.4 percent today, which indicates that vertically integrated cable operators as a whole – and considered
solely on a national basis – have a reduced incentive to enter into exclusive contracts, compared to 2007.64
58 See 2007 Extension Order, 22 FCC Rcd at 17827-29, ¶ 53; see also 2002 Extension Order, 17 FCC Rcd at 12140,
¶¶ 37-38.
59 See 2007 Extension Order, 22 FCC Rcd at 17826-27, ¶ 50; see also 2002 Extension Order, 17 FCC Rcd at 12147-
48, ¶ 53.
60 Vertically integrated cable operators and their affiliated programmers argue that, with some exceptions, they do
not have an incentive to enter into exclusive contracts, whereas MVPDs that compete with vertically integrated
cable operators contend that this incentive has remained the same or even increased since 2007. Compare
Comments of Comcast Corporation and NBCUniversal Media, LLC (June 22, 2012), at 2-3, 7 (“Comcast
Comments”); Comments of Discovery Communications, LLC (June 22, 2012), at 3-8 (“Discovery Comments”);
MSG Comments at 13-17; Comments of National Cable & Telecommunications Association (June 22, 2012), at 13-
14 (“NCTA Comments”) with Comments of the American Cable Association (June 22, 2012), at 5-9 (“ACA
Comments”); Comments of AT&T Inc. (June 22, 2012), at 3, 12-23 (“AT&T Comments”); Comments of
CenturyLink (June 22, 2012), at 9-10, 13, 15-16 (“CenturyLink Comments”); Comments of DIRECTV, LLC (June
22, 2012), at 13-18, 23-26 (“DIRECTV Comments”); Comments of DISH Network L.L.C. (June 22, 2012), at 2, 4-
10 (“DISH Comments”); Comments of the Independent Telephone & Telecommunications Alliance (June 22,
2012), at 4-5 (“ITTA Comments”); Comments of the United States Telecom Association (June 22, 2012), at 12
(“USTelecom Comments”); Comments of Verizon (June 22, 2012), at 3, 9-10 (“Verizon Comments”); Comments of
the Writers Guild of America, West, Inc. (June 22, 2012), at 5-7, 11-12 (“WGA-W Comments”); Reply Comments
of the American Cable Association (July 23, 2012), at 14-17 (“ACA Reply Comments”); Reply Comments of the
American Public Power Association (July 23, 2012), at 4 (“APPA Reply Comments”).
61 See 2007 Extension Order, 22 FCC Rcd at 17821, ¶ 44; 2002 Extension Order, 17 FCC Rcd at 12140, ¶¶ 37-38.
62 See 2007 Extension Order, 22 FCC Rcd at 17827-29, ¶ 53; see also 2002 Extension Order, 17 FCC Rcd at 12147-
49, ¶¶ 53-54.
63 See 2007 Extension Order, 22 FCC Rcd at 17827-29, ¶ 53 (“[W]e find that this reduction in potential
subscribership or viewership has not reached a point where withholding would be unprofitable.”).
64 See infra Appendix E; see also Comcast Comments at 7 (“Absent extraordinary circumstances, it would be
economically irrational for cable-affiliated programmers to cut themselves off from DBS and telco customers, who
together account for more than 40 percent of all multichannel subscribers. The potential revenues are too significant
to be lightly disregarded . . . .”); Discovery Comments at 5 (“Any programmer – whether affiliated with a cable
operator or not – has a strong and clear incentive to obtain the widest possible distribution of its programming. This
business imperative has only grown stronger in recent years as new MVPD competitors have grown to be among the
largest distributors, making it implausible that a programmer would deliberately refrain from agreeing to carriage on
their platforms.”); MSG Comments at 14 n.46 (“The size and market share of competing MVPDs in today’s
marketplace means that the costs of pursuing a foreclosure strategy through exclusivity also have risen substantially,
(continued….)
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18.On a regional basis, however, there remain markets where cable operators have a
substantial share of subscribers.65 In the 2007 Extension Order, the Commission noted that the cable
industry’s share of MVPD subscribers in certain Designated Market Areas (“DMAs”) remained above or
near the 78 percent level that the Commission previously found in 2002 was sufficient to make
exclusivity a profitable strategy.66 Here, the record indicates that the cable industry’s share of MVPD
subscribers in certain DMAs remains above or near both the 67 percent level and the 78 percent level that
the Commission has previously found to be sufficient to make exclusivity a profitable strategy.67
Although the number of DMAs in which the cable industry’s share of MVPD subscribers exceeds these
benchmarks has decreased since 2007, there are still a considerable number of DMAs in which concerns
about competition remain.68
19.
Moreover, we note that data submitted in the record by cable operators indicate that
clustering has increased since 2007.69 The Commission has, in past orders, observed that clustering may
making it even less likely that lifting the ban would result in anti-competitive uses of exclusivity.”); NCTA
Comments at 13 (“[T]he very success of DBS and telco video providers means that any decision for a program
network to deal exclusively with cable operators would require it to forgo viewership and revenues from more than
40 percent of MVPD households.”).
65 See infra nn.67-68, 77.
66 See 2007 Extension Order, 22 FCC Rcd at 17827-29, ¶ 53 (“[B]ecause the share of MVPD subscribers held by
cable operators is above or near 78 percent in many DMAs, there is no reduction in potential subscribership or
viewership in many regional areas from that which we observed in the 2002 Extension Order.”).
67 See NPRM, 27 FCC Rcd at 3435, ¶ 41 (citing data from Nielsen Media Research and concluding that “[o]n a
regional basis, the market share held by cable operators in DMAs varies considerably, from a high in the 80 percent
range to a low in the 20 percent range. In some major markets, such as New York, Philadelphia, and Boston, the
share of MVPD subscribers attributable to cable operators far exceeds the national cable market share of 67 percent
deemed significant in the 2007 Extension Order.”); see also Comcast/NBCU Order, 26 FCC Rcd at 4284-85, ¶ 116
(finding that Comcast’s market share is 67 percent in the Philadelphia DMA); DIRECTV Comments at 18; DISH
Comments at 2, 4; WGA-W Comments at 7; Reply Comments of DIRECTV, L.L.C. (July 23, 2012), at 16 n.59
(“DIRECTV Reply Comments”).
68 In the 2007 Extension Order, based on data from Nielsen Media Research as of July 2007, the Commission noted
that the share of MVPD subscribers held by “wired cable operators” exceeded 78 percent in 36 out of 210 DMAs.
See 2007 Extension Order, 22 FCC Rcd at 17828, ¶ 53 n.277. Nielsen Media Research data as of July 2012 indicate
that the share of MVPD subscribers held by “wired cable operators” (i) exceeds 78 percent in 17 out of 210 DMAs
and (ii) exceeds 67 percent in 64 out of 210 DMAs. See ADS, OTA and Wired-Cable Penetration by DMA: DMA
Household Universe Estimates: July 2012, available at http://www.tvb.org/184839/4729/ads_cable_dma; see also
2010 Program Access Order, 25 FCC Rcd at 763, ¶ 27 n.97 (based on data from Nielsen Media Research as of July
2009, finding that the share of MVPD subscribers held by “wired cable operators” exceeded 70 percent in 78 out of
210 DMAs). Nielsen data on “wired cable operators” include wired video providers that compete with incumbent
cable operators. Assuming an 8.5 percent market share for these wired video providers in each DMA (see infra
Appendix E), the share of MVPD subscribers held by incumbent cable operators (i.e., excluding their DBS and
wired video provider competitors): (i) exceeds 78 percent in 3 out of 210 DMAs and (ii) exceeds 67 percent in 23
out of 210 DMAs. See ADS, OTA and Wired-Cable Penetration by DMA: DMA Household Universe Estimates:
July 2012, available at http://www.tvb.org/184839/4729/ads_cable_dma.
69 See Cablevision July 11th Letter; Comcast July 11th Letter; Letter from Christopher J. Harvie, Counsel for
Cablevision, to William T. Lake, Chief, Media Bureau, FCC, MB Docket No. 12-68 et al. (July 27, 2012)
(“Cablevision July 27th Letter”); Letter from Matthew A. Brill, Counsel for Time Warner Cable Inc., to Marlene H.
Dortch, Secretary, FCC, MB Docket No. 12-68 et al. (Aug. 16, 2012) (“TWC Aug. 16th Letter”); TWC Aug. 31st
Letter.
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increase a cable operator’s incentive to enter into exclusive contracts for regional programming.70 In the2007 Extension Order, the Commission noted that Comcast passed more than 70 percent of television
households in 30 Designated Market Areas (DMAs) and TWC passed more than 70 percent of television
households in 23 DMAs.71 Based on the 2011 data provided by the cable operators, Comcast now passes
more than 70 percent of television households in [REDACTED
]72 DMAs and TWC passes more than 70 percent of television households
in [REDACTED
] DMAs.73 These
calculations employ data from Nielsen on television households in each DMA74 and homes passed data
provided by the cable operators.75 In the 2007 Extension Order, the Commission also noted that the
collective market share of MVPDs that compete with incumbent cable operators in many DMAs where
cable multiple system operators (“MSOs”) have clusters is far less than their collective nationwide market
share.76 The same holds true today.77
70 See 2002 Extension Order, 17 FCC Rcd at 12145, ¶ 47; see also 2007 Extension Order, 22 FCC Rcd at 17830, ¶
55; ACA Comments at 8-9; DIRECTV Comments at 18; DISH Comments at 4.
71 See 2007 Extension Order, 22 FCC Rcd at 17832, ¶ 58 and 17886, ¶ 9, Appendix C.
72 The redacted data herein is Highly Confidential Information, as that term is defined in the Second Protective Order
issued on June 14, 2012 in this proceeding. See Revision of the Commission’s Program Access Rules et al., MB
Docket Nos. 12-68, 07-18, 05-192, Second Protective Order, 27 FCC Rcd 6346 (June 14, 2012). Access to an
unredacted version of this Order is governed by the terms of the Second Protective Order.
73 We also received data from Cablevision showing [REDACTED
] DMAs in which Cablevision passes more than 70 percent of television households. Per
request from the Media Bureau, Cablevision provided only market-level data for its eastern region. See Cablevision
July 27th Letter. The Commission did not analyze the extent of clustering of Cablevision systems in the 2007
Extension Order.
74 See Nielsen, Local Television Market Universe Estimates: 2011-2012 DMA Ranks, effective September 24, 2011.
75 The homes passed figures submitted by the cable operators were adjusted by Commission staff to account for the
fact that not all homes passed are television households and that some homes passed are vacant. Since cable
operators do not generally have access to homes passed that are not subscribers, the operators are unlikely to be able
to adjust for these factors in their counts. Indeed, in some cases, cable operators reported [REDACTED
]. The adjustments made are based on Nielsen’s estimate of 96.7 percent of U.S. homes with a
television set and figures from the Bureau of the Census (Current Population Survey) showing that 89.2 percent of
total U.S. housing units were either occupied or seasonally occupied. See Nielsen, Client Communication: TV
Penetration Trends: Q1 2012 Update, Feb. 14, 2012; U.S. Bureau of the Census, Current Population Survey, Series
H-111: Table 7. Estimates of the Total Housing Inventory for the United States: 1965 to Present, available at
http://www.census.gov/hhes/www/housing/hvs/historic/. These figures are from different sources but appear
consistent. The Census total of 118.1 million occupied or seasonally occupied households, when multiplied by
Nielsen’s percentage of homes with a television set, yields a figure of 114.2 million households, strikingly close to
Nielsen’s 114.7 million television households figure. The adjustments to the DMA-level homes passed data is as
follows: Homes passed (adjusted by the Commission) = Homes passed (initial cable operator homes passed figure)
* .967 * .892. In a limited number of cases, even after these adjustments, [REDACTED
]. For those cases, we used data from the Commission’s National Broadband Map to estimate the
share of television households in the DMA that was passed by the cable operator in question. See National
Broadband Map Data, Download Files by State,Territory, and District of Columbia (download each state zip file
and extract the following text files for each state: XX-NBM-Address-Street-CSV-DEC-2011.txt, XX-NBM-
CBLOCK-CSV-DEC-2011.txt), available at http://www.broadbandmap.gov/data-download.
76 See 2007 Extension Order, 22 FCC Rcd at 17830, ¶ 55 n.296.
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20.In addition to this data, we note that real-world evidence indicates that in some markets
cable-affiliated programmers may have an incentive to enter into exclusive contracts that can harm
competition. As noted in the previous extension decisions as well as in the 2010 Program Access Order,
vertically integrated cable operators have withheld from competitors certain terrestrially delivered
networks, which are not subject to the exclusive contract prohibition.78 Most recently, Cablevision and
MSG withheld the terrestrially delivered MSG HD and MSG+ HD RSNs from AT&T and Verizon.79
21.
Because the record before us indicates that there may be certain region-specific
circumstances where vertically integrated cable operators may have an incentive to withhold satellite-
delivered programming from competitors,80 we believe that a case-by-case approach authorized under
other provisions of the Act – rather than a preemptive ban on exclusive contracts – will adequately
address competitively harmful conduct in a more targeted, less burdensome manner.81 We disagree with
77 For example, based on a nationwide market share for these competitors of 42.6 percent (see infra, Appendix E),
their regional market share is less than their national average in markets including, but not limited to, the following
where a cable operator passes more than 70 percent of television households: [REDACTED
] See ADS, OTA and Wired-Cable Penetration by DMA: DMA Household Universe Estimates:
July 2012, available at http://www.tvb.org/184839/4729/ads_cable_dma; see also supra n.68.
78 See 2010 Program Access Order, 25 FCC Rcd at 766-67, ¶ 30 (listing examples of withholding of terrestrially
delivered, cable-affiliated programming); 2007 Extension Order, 22 FCC Rcd at 17826, ¶ 49 (same); 2002
Extension Order, 17 FCC Rcd at 12149-50, ¶ 55; see also AT&T Comments at 13-19; DIRECTV Comments,
Report of Professor Kevin M. Murphy (“Murphy Report”) at 31; DISH Comments, Expert Report of Simon J.
Wilkie, Ph.D. (“Wilkie Report”) at 3, 10-13; USTelecom Comments at 12; Verizon Comments at 3, 9-10; Reply
Comments of Verizon (July 23, 2012), at 2-3 (“Verizon Reply Comments”). DISH also claims that expiration of the
prohibition will provide cable-affiliated programmers with an additional incentive to enter into exclusive contracts
to avoid program access complaints alleging a violation of the anti-discrimination provision in Section 628(c)(2)(B),
which does not have a sunset date. See DISH Comments at 13.
79 See supra n.10.
80 We also note that, in past extension decisions, the Commission has noted that increases in horizontal consolidation
among vertically integrated cable operators means they will reap a greater portion of the gains from exclusivity,
thereby increasing the incentive to enter into exclusive contracts. See 2007 Extension Order, 22 FCC Rcd at 17829-
30, ¶ 54; 2002 Extension Order, 17 FCC Rcd at 12147-48, ¶ 53. Our most recent data indicates that the percentage
of MVPD subscribers receiving their video programming from one of the four largest vertically integrated cable
operators today is 42.7 percent, an increase from the 2002 Extension Order (34 percent), but a decrease from the
2007 Extension Order (54-56.75 percent). Compare infra Appendix E with 2002 Extension Order, 17 FCC Rcd at
12147-48, ¶ 53 and 2007 Extension Order, 22 FCC Rcd at 17829-30, ¶ 54; see also ACA Comments at 7 (stating
that horizontal consolidation among the four largest vertically integrated cable operators has not changed
significantly over the past 17 years); DIRECTV Comments at 16-17 (noting that horizontal consolidation among the
four largest vertically integrated cable operators has increased since 2002); Joint Comments of Interstate
Communications, OmniTel Communications, Communications 1 Network, Inc., Farmers Mutual Telephone Coop of
Shellsburg, Huxley Communications Cooperative, Hospers Telephone Company, Premier Communications, and
Marne & Elk Horn Telephone Company (June 22, 2012), at 4 (same) (“Iowa Telco Comments”); but see Discovery
Comments at 6-7 (noting a decrease in horizontal consolidation among the four largest vertically integrated cable
operators over the past five years). While the record evidence demonstrates that the data pertaining to horizontal
consolidation have remained consistent with 2002 levels, this factor is outweighed by other marketplace
considerations favoring elimination of the preemptive ban. See infra ¶¶ 22-31.
81 See infra ¶ 55 (establishing a rebuttable presumption that an exclusive contract involving a satellite-delivered,
cable-affiliated RSN has the “purpose or effect” of “significantly hindering or preventing” the complainant from
providing programming, as set forth in Section 628(b)).
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commenters to the extent they imply that Congress intended the prohibition to expire only once verticallyintegrated cable operators no longer have any incentive to enter into exclusive contracts. Such an
interpretation contradicts Congress’s recognition that exclusive contracts do not always harm competition
and can have procompetitive benefits in some cases.82
(ii)
Ability
22.In addition to an incentive to enter into exclusive contracts, we also assess the “ability” of
vertically integrated cable operators to use exclusivity to harm competition and diversity in the
distribution of video programming. In this regard, the Commission considers whether satellite-delivered,
cable-affiliated programming remains programming for which there are no good substitutes and are
necessary for competition.83 In previous extension orders, the Commission found that there were no good
substitutes for a significant amount of satellite-delivered, cable-affiliated programming, and that such
programming remained necessary for viable competition in the video distribution market.84 Accordingly,
the Commission concluded that cable-affiliated programmers retained “the ability to favor their affiliated
cable operators over competitive MVPDs such that competition and diversity in the distribution of video
programming would not be preserved and protected absent the rule.”85 In reaching this conclusion, the
Commission explained that “[w]hat is most significant to our analysis is not the percentage of total
available programming that is vertically integrated with cable operators, but rather the popularity of the
programming that is vertically integrated and how the inability of competitive MVPDs to access this
programming will affect the preservation and protection of competition in the video distribution
marketplace.”86
82 See infra nn.138, 148; NCTA Reply Comments at 7 (“But the mere fact that it may be profitable for some cable
operators to become the exclusive providers of their own programming cannot be a sufficient basis for continuing
the ban. If it were, the sunset provision of Section 628(c) would be senseless. Exclusive contracts would continue
to be banned – but only so long as such contracts might actually exist!”).
83 See 2007 Extension Order, 22 FCC Rcd at 17811, ¶ 30; 2002 Extension Order, 17 FCC Rcd at 12135, ¶ 24.
84 See 2007 Extension Order, 22 FCC Rcd at 17810, ¶ 29 and 17816, ¶ 38 (stating that the “record reflects that
numerous national programming networks, RSNs, premium programming networks, and VOD networks are cable-
affiliated programming networks that are demanded by MVPD subscribers and for which there are no adequate
substitutes”); 2002 Extension Order, 17 FCC Rcd at 12139, ¶ 33 (“a considerable amount of vertically integrated
programming in the marketplace today remains ‘must have’ programming to most MVPD subscribers”); see also
2007 Extension Order, 22 FCC Rcd at 17814-16, ¶ 37 (finding that the four largest cable operators had an interest in
“six of the Top 20 satellite-delivered networks as ranked by subscribership, seven of the Top 20 satellite-delivered
networks as ranked by prime time ratings, almost half of all RSNs, popular subscription premium networks, such as
HBO and Cinemax, and video-on-demand (‘VOD’) networks, such as iN DEMAND”); 2002 Extension Order, 17
FCC Rcd at 12138, ¶ 32 (finding that cable operators were affiliated with “35 percent of the most popularly rated
satellite-delivered prime time programming and 45 percent of the most-subscribed-to programming[,] . . . sought-
after and non-duplicable regional sports programming, . . . subscription premium networks, such as HBO and
Cinemax . . .”).
85 2007 Extension Order, 22 FCC Rcd at 17810, ¶ 29; see 2002 Extension Order, 17 FCC Rcd at 12139, ¶ 34.
86 2007 Extension Order, 22 FCC Rcd at 17814-15, ¶ 37; 2002 Extension Order, 17 FCC Rcd at 12138, ¶ 32. The
Commission also acknowledged that “there exists a continuum of vertically integrated programming, ‘ranging from
services for which there may be substitutes (the absence of which from a rival MVPD’s program lineup would have
little impact), to those for which there are imperfect substitutes, to those for which there are no close substitutes at
all (the absence of which from a rival MVPD’s program lineup would have a substantial negative impact).’” 2007
Extension Order, 22 FCC Rcd at 17816, ¶ 38 (quoting 2002 Extension Order, 17 FCC Rcd at 12139, ¶ 33); see also
DISH Comments, Wilkie Report at 3 (“Denial of access to popular programming by a vertically integrated
competitor serves to raise rivals’ costs and leads to diminished competition and higher prices in the MVPD
market.”) (emphasis added).
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23.We recognize that some commenters contend that the data in the NPRM indicate little
change since 2007 in the amount of satellite-delivered, cable affiliated programming among the most
popular cable networks.87 These claims, however, do not consider four developments that impact
significantly our determination as to whether a preemptive prohibition remains necessary under the terms
of the statute.
24.
First, as explained in the NPRM, the Commission in 2011 granted the application of
Comcast, General Electric Company (“GE”), and NBCU to assign and transfer control of broadcast,
satellite, and other radio licenses from GE to Comcast.88 Reviewing that vertical integration pursuant to
Section 310(d), the Commission approved the transaction with conditions, including a program access
condition requiring Comcast/NBCU to make networks it controls (the “Comcast-controlled networks”)89
available to competitors. As set forth in Appendices F and G, we estimate that 30 satellite-delivered
national networks and 14 satellite-delivered RSNs are Comcast-controlled networks.90 Comcast/NBCU is
subject to these conditions until January 2018.91 In other words, even after the exclusive contract
prohibition expires, these Comcast-controlled networks could not be subject to an exclusive contract until
87 See NPRM, 27 FCC Rcd at 3427-28, ¶ 26 (stating that, since the 2007 Extension Order, (i) the percentage of
satellite-delivered, national programming networks that are cable-affiliated has declined from 22 percent to
approximately 14.4 percent; (ii) the number of cable-affiliated networks among the Top 20 satellite-delivered,
national programming networks as ranked by subscribership has increased from six to seven; and (iii) the number of
cable-affiliated networks among the Top 20 satellite-delivered, national programming networks as ranked by
average prime time ratings has remained at seven); see also ACA Comments at 6-7, 9; AT&T Comments at 9-12;
CenturyLink Comments at 7, 10-11, 13-15; DIRECTV Comments at 19-21; DISH Comments at 6; ITTA Comments
at 5-6; OPASTCO/NTCA Comments at 3-5; USTelecom Comments at 6-8; Verizon Comments at 2-5, 11; WGA-W
Comments at 4-5; ACA Reply Comments at iv, 12-13; APPA Reply Comments at 5-6; AT&T Reply Comments at
2, 10.
88 See NPRM, 27 FCC Rcd at 3424, ¶¶ 19-20.
89 See Comcast/NBCU Order, 26 FCC Rcd at 4358, Appendix A, Condition II. As discussed in the NPRM, the
program access merger conditions apply to “C-NBCU Programmers.” See NPRM, 27 FCC Rcd at 3428, ¶ 26 n.91.
Whether a network qualifies as a “C-NBCU programmer” is a fact-specific determination. See id. As described in
the NPRM, with the exception of the iN DEMAND networks, we assume that any network in which Comcast or
NBCU holds a 50 percent or greater interest is a “C-NBCU Programmer” subject to these conditions. See infra
Appendix F, Table 4 and Appendix G, Tables 2 and 3. We refer to these networks as “Comcast-controlled
networks.” See NPRM, 27 FCC Rcd at 3428, ¶ 26 n.91. We refer to other networks in which Comcast or NBCU
holds a less than 50 percent interest as “Comcast-affiliated networks,” which we assume for purposes of the
estimates in this Order are not “C-NBCU Programmers” subject to the program access merger conditions adopted in
the Comcast/NBCU Order, but are subject to the program access rules, including the exclusive contract prohibition.
See id. No commenter opposed this proposed distinction between Comcast-controlled and Comcast-affiliated
networks as set forth in the NPRM. In addition, given Comcast’s previous statements that it cannot control
decisionmaking at iN DEMAND, the NPRM proposed to consider iN DEMAND as Comcast-affiliated, but not
Comcast-controlled. See id. No commenter opposed this characterization, thus we consider the iN DEMAND
networks to be Comcast-affiliated, but not Comcast-controlled, for purposes of the estimates in this Order. Nothing
in this Order should be read to state or imply any position as to whether any particular network qualifies or does not
qualify as a “C-NBCU Programmer.”
90 See infra Appendix F, Table 4 and Appendix G, Table 2.
91 See Comcast/NBCU Order, 26 FCC Rcd at 4381, Appendix A, Condition XX (stating that the conditions will
remain in effect for seven years (until January 2018), provided that the Commission will consider a petition from
Comcast/NBCU for modification of a condition if they can demonstrate that there has been a material change in
circumstances, or that the condition has proven unduly burdensome, such that the condition is no longer necessary in
the public interest).
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January 2018.92 For that reason, we find it appropriate to exclude the Comcast-controlled networks whenassessing the continued need for a preemptive ban.93
25.
Some commenters contend, however, that the Commission must consider the Comcast-
controlled networks as if they would be impacted by a sunset of the exclusivity prohibition. They claim
that, if the Commission declines to extend the prohibition based on an analysis of the market that ignores
the Comcast-controlled networks, the Commission will have no vehicle to consider whether the
prohibition remains necessary after the Comcast merger conditions expire.94 We reject these claims. The
Commission may exercise its broad rulemaking authority under Section 628(b) to adopt rules prohibiting
certain exclusive contracts involving cable-affiliated programming if it becomes necessary after these
merger conditions expire, based on an assessment of the marketplace at that time.95
26.
Second, after the Commission released the NPRM, Comcast sold its interest in A&E to
A&E’s other owners (Disney and Hearst).96 As a result of this transaction, the regulatory status of the 17
networks owned by A&E changed from cable-affiliated to non-cable-affiliated.97 As set forth in the
NPRM, A&E-owned networks account for four of the Top 20 national cable networks as ranked by
average prime-time ratings98 and three of the Top 20 national cable networks as ranked by
92 See supra n.12.
93 See MSG Comments at 12 (stating that expiration of the exclusive contract prohibition will have no impact on the
availability of Comcast networks that will continue to be subject to program access provisions in the
Comcast/NBCU Order); TWC Comments at 8 (stating that Comcast-controlled networks “would be subject to
program access requirements regardless of the action taken by the Commission in this proceeding and should thus be
ignored in this analysis”); see also NPRM, 27 FCC Rcd at 3433, ¶ 35 (seeking comment on to what extent the
Commission should consider Comcast-controlled networks in its review of the exclusive contract prohibition). Our
decision here is consistent with the 2011 Program Carriage Order. See Leased Commercial Access; Development of
Competition and Diversity in Video Programming Distribution and Carriage, Second Report and Order, 26 FCC Rcd
11494 (2011) (“2011 Program Carriage Order”). In that order, the Commission found that the “number of cable-
affiliated networks recently increased significantly after the merger of Comcast and NBC Universal, thereby
highlighting the continued need for an effective program carriage complaint regime.” Id. at 11518-19, ¶ 33. In the
Comcast/NBCU Order, the Commission specifically relied on the program carriage complaint process to address
concerns relating to program carriage resulting from the merger. See id. Accordingly, the increase in vertical
integration resulting from the Comcast/NBCU transaction was a significant factor in the 2011 Program Carriage
Order. With respect to program access concerns, however, the Comcast/NBCU Order adopted specific conditions
to address these concerns, thus allowing us to exclude the Comcast-controlled networks from consideration here.
94 See ACA Comments at 10; DIRECTV Comments at 21 n.67; DISH Comments at 2, 9-10, 14; see also
CenturyLink Comments at 7-9; WGA-W Comments at 4-5, 10.
95 See Nat’l Cable & Telecomm. Ass’n v. FCC, 567 F.3d 659, 664 (D.C. Cir. 2009) (holding that Section 628(b) is
written in “broad and sweeping terms” and therefore “‘should be given broad, sweeping application’”) (quoting
Consumer Elecs. Ass’n v. FCC, 347 F.3d 291, 298 (D.C. Cir. 2003)); see also 2010 Program Access Order, 25 FCC
Rcd at 771, ¶ 35 n.139 (stating that “on an appropriate record the Commission would have authority to adopt a per
se ban on particular unfair acts prohibited by Section 628(b)”).
96 See supra ¶ 14. This transaction closed on August 22, 2012. See NBCUniversal Media, LLC, SEC Form 8-K
(Aug. 22, 2012).
97 These networks are: A&E, A&E HD, Bio, Bio HD, Crime & Investigation, Crime and Investigation HD, History,
History HD, History en Español, H2 (formerly History International), H2 HD, Lifetime, Lifetime HD, Lifetime Real
Women, Lifetime Movie Network, Lifetime Movie Network HD, and Military History Channel. See NPRM, 27
FCC Rcd at 3478-81, Appendix B, Table 2.
98 These four networks are History, A&E, Lifetime, and Lifetime Movie Network. See id. at 3477, Appendix B,
n.16.
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subscribership.99 Thus, the change in the regulatory status of the A&E networks has reduced since 2007the number of satellite-delivered, cable-affiliated networks among the Top 20 national cable networks
ranked by subscribership and by average prime-time ratings.100
27.
Third, in both the 2002 Extension Order and the 2007 Extension Order, the Commission
found significant that the subscription premium networks HBO and Cinemax were cable-affiliated.101
The Commission relied on comments arguing that “first-run programming produced by HBO and other
premium networks [is] essential for a competitive MVPD to offer to potential subscribers in order to
compete with the incumbent cable operator.”102 In 2009, however, the Commission approved a
transaction resulting in the separation of TWC, a cable operator, from Time Warner Inc., an owner of
satellite-delivered, national programming networks, including HBO and Cinemax.103 As a result, HBO
and Cinemax are no longer cable-affiliated. This transaction was also significant because it changed the
regulatory status of other cable networks cited by the Commission in the 2007 Extension Order (CNN,
TBS, and TNT) from cable-affiliated to non-cable-affiliated.104 In declining to adopt a condition applying
the program access rules to Time Warner Inc. post-transaction, the Commission explained that the
underlying premise of the program access rules would no longer apply because Time Warner Inc. (a non-
cable-affiliated programmer) and TWC would no longer have the incentive to discriminate in favor of
each other.105
28.
Fourth, in the 2007 Extension Order, the Commission relied on data indicating that 46
percent of all RSNs were cable-affiliated.106 These data, however, did not distinguish between
terrestrially delivered and satellite-delivered RSNs. As discussed above, the exclusive contract
prohibition applies only to programming that is delivered via satellite; it does not apply to programming
that is delivered via terrestrial facilities.107 An exclusive contract involving a terrestrially delivered,
cable-affiliated RSN is permitted unless the Commission finds in response to a complaint that it violates
Section 628(b) of the Act.108 We, therefore, further refine our prior analysis by distinguishing between
99 These three networks are A&E, Lifetime, and History. See id. at 3476, Appendix B, n.12.
100 See infra Appendix F, Table 2 (listing Top 20 national cable networks ranked by subscribership) and Table 3
(listing Top 20 national cable networks ranked by average prime time ratings).
101 See 2007 Extension Order, 22 FCC Rcd at 17814-16, ¶ 37; 2002 Extension Order, 17 FCC Rcd at 12138, ¶ 32.
102 2007 Extension Order, 22 FCC Rcd at 17815, ¶ 37 n.179. In the 2002 Extension Order, the Commission stated
that, although subscription premium networks such as HBO and Cinemax “are not among the top programming
services in subscribership,” they nonetheless “make an important contribution to an MVPD’s revenue and profits.”
2002 Extension Order, 17 FCC Rcd at 12138, ¶ 32.
103 See Applications for Consent to the Assignment and/or Transfer of Control of Licenses, Time Warner Inc.,
Assignor/Transferor, and Time Warner Cable Inc., Assignee/Transferee, Memorandum Opinion and Order, 24 FCC
Rcd 879 (MB, WCB, WTB, IB, 2009) (“Time Warner Order”).
104 See 2007 Extension Order, 22 FCC Rcd at 17814-16, ¶ 37 (“The record thus reflects that popular national
programming networks, such as CNN, TNT, TBS, and The Discovery Channel . . . are affiliated with the four largest
vertically integrated cable MSOs and that such programming networks are demanded by MVPD subscribers.”);
2002 Extension Order, 17 FCC Rcd at 12136-37, ¶ 28.
105 See Time Warner Order, 24 FCC Rcd at 890, ¶ 21.
106 See 2007 Extension Order, 22 FCC Rcd at 17805, ¶ 22 and 17814-16, ¶ 37.
107 See supra ¶ 1.
108 Among other things, a complainant must demonstrate that the exclusive contract involving terrestrially delivered,
cable-affiliated programming is an “unfair act” and that it has the “purpose or effect” of “significantly hindering or
preventing” the complainant from providing satellite cable programming or satellite broadcast programming to
(continued….)
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cable-affiliated RSNs that are subject to the prohibition (i.e., RSNs delivered via satellite) and those thatare not (i.e., RSNs delivered via terrestrial means). To that end, the Media Bureau asked the three cable
operators that own the greatest number of RSNs (Cablevision, Comcast, and TWC) whether their RSNs
are satellite-delivered or terrestrially delivered.109 The responses reveal that a little fewer than half (43
percent) of all cable-affiliated RSNs are terrestrially delivered and therefore beyond the scope of the
exclusive contract prohibition.110 The remaining 57 percent of cable-affiliated RSNs are satellite-
delivered, but over 43 percent of these RSNs are Comcast-controlled and thus subject to program access
merger conditions until January 2018. As set forth in Appendix G, the data demonstrate the following
regarding the 108 RSNs (both cable-affiliated and non-cable-affiliated) available today: (i) 52 RSNs (48
percent) are not cable-affiliated; (ii) 24 RSNs (22 percent) are cable-affiliated but terrestrially delivered
and therefore subject to a case-by-case process under Section 628(b);111 (iii) 14 RSNs (13 percent) are
cable-affiliated and satellite-delivered, but are also Comcast-controlled, and therefore subject to program
access merger conditions until January 2018 that require Comcast to make these networks available to
competitors;112 and (iv) only 18 RSNs (17 percent) are cable-affiliated, satellite-delivered, and not
Comcast-controlled, and therefore potentially impacted by the expiration of the exclusive contract
prohibition.113
subscribers or consumers, as required by Section 628(b). See 2010 Program Access Order, 25 FCC Rcd at 780-82,
¶¶ 50-51; see also supra n.10.
109 See Letter from William T. Lake, Chief, Media Bureau, FCC to Michael E. Olsen, Cablevision, MB Docket No.
12-68 et al. (June 27, 2012); Letter from William T. Lake, Chief, Media Bureau, FCC to Kathryn A. Zachem,
Comcast, MB Docket No. 12-68 et al. (June 27, 2012); Letter from William T. Lake, Chief, Media Bureau, FCC to
Steven N. Teplitz, TWC, MB Docket No. 12-68 et al. (June 27, 2012).
110 See infra Appendix G. The Media Bureau did not request information from Bright House or Cox regarding
whether their affiliated RSNs are satellite-delivered or terrestrially delivered. This includes the following four
RSNs: Bright House Sports Network, Bright House Sports Network HD, Cox Sports Television, and Cox Sports
Television HD. Moreover, Comcast and TWC did not provide information regarding whether the following
affiliated RSNs are satellite-delivered or terrestrially delivered: Comcast SportsNet Houston, Comcast SportsNet
Houston HD, Midco Sports Network, Midco Sports Network HD, Time Warner Cable SportsNet, Time Warner
Cable SportsNet HD, Time Warner Cable Deportes, and Time Warner Cable Deportes HD. For purposes of this
analysis, and with the exception of Cox-4 and Cox-4 HD (which the Commission has previously found are
terrestrially delivered (see 2010 Program Access Order, 25 FCC Rcd at 756-57, ¶ 17)), we assume that all cable-
affiliated RSNs for which we do not have information are satellite-delivered and therefore subject to the exclusive
contract prohibition. Thus, our estimate that 43 percent of cable-affiliated RSNs are terrestrially delivered is
conservative.
111 Four of these 24 terrestrially delivered, cable-affiliated RSNs are Comcast-controlled RSNs and therefore also
subject to program access merger conditions until January 2018 that require Comcast to make these networks
available to competitors. See infra Appendix G.
112 As discussed above, our decision to decline to extend the exclusive contract prohibition beyond its sunset date
does not impact our analysis in the Comcast/NBCU Order concluding that the program access merger conditions
adopted therein were necessary to curb Comcast’s anticompetitive exclusionary program access strategies that might
result from the transaction. See supra n.12.
113 See infra Appendix G. Even with respect to these 18 RSNs, TWC has stated it will make its four RSNs featuring
the games of the Los Angles Lakers (Time Warner Cable SportsNet, Time Warner Cable SportsNet HD, Time
Warner Cable Deportes, and Time Warner Cable Deportes HD) available to competing MVPDs. See TWC Reply
Comments at 9 (“As TWC has explained, there will be many instances where cable operators will choose the
broadest possible distribution of vertically integrated content on competing MVPD platforms, as TWC has
announced it will do in connection with its forthcoming Lakers RSNs, whereas in other circumstances, exclusive
distribution arrangements might be preferable.”) (citing Time Warner Cable and the Los Angeles Lakers Sign Long-
Term Agreement for Lakers Games, Beginning With 2012-2013 Season (Feb. 14, 2011),
(continued….)
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29.Based on the four developments noted above, the record indicates a decrease since 2007
in the amount of satellite-delivered, cable-affiliated programming among the most popular cable
networks. In particular, the number of Top 20 national cable networks as ranked by average prime time
ratings that are cable-affiliated has fallen from seven in 2007 to one today114 and the number of Top 20
national cable networks as ranked by subscribership that are cable-affiliated has fallen from six in 2007 to
three today.115 Moreover, while the Commission in 2007 found that “popular subscription premium
networks, such as HBO and Cinemax” were cable-affiliated,116 those networks are no longer cable-
affiliated today. In addition, while the Commission in 2007 relied on data indicating that 46 percent of all
RSNs were satellite-delivered and cable-affiliated, this figure is only 17 percent today (not including
Comcast-controlled networks, which are subject to program access merger conditions).117
30.
In light of the mixed picture presented by the current MVPD market (including the
decline in the amount of satellite-delivered, cable-affiliated programming among the most popular cable
networks), we find that a broad, preemptive ban on exclusive contracts is no longer necessary to prevent
cable-affiliated programmers from harming competition, considering that a case-by-case process will
remain in place after the prohibition expires to assess the impact of individual exclusive contracts. We
recognize that some satellite-delivered, cable-affiliated programming, such as certain RSNs, remains
necessary for competition and has no good substitutes. However, we do not believe this warrants
extension of a preemptive ban on exclusivity when a case-by-case approach can address competitively
harmful exclusive contracts on a more targeted basis.
(iii)
Conclusion
31.Based on the foregoing, we can no longer conclude that the exclusive contract prohibition
remains necessary to preserve and protect competition and diversity in the distribution of video
programming considering that a case-by-case process will remain in place after the prohibition expires to
assess the impact of individual exclusive contracts. While the record indicates that vertically integrated
cable operators may still have the ability and incentive to withhold satellite-delivered, cable-affiliated
programming in some markets with the effect of harming competition and diversity, the record also
demonstrates a decline since 2007 in the amount of satellite-delivered, cable-affiliated programming
among the most popular cable networks. To be sure, absent the prohibition, there may be instances where
cable operators enter into exclusive contracts for satellite-delivered, cable-affiliated programming that is
http://ir.timewarnercable.com/phoenix.zhtml?c=207717&p=irol-newsArticle&ID=1528805&highlight (“The
networks will be available to all satellite, cable and telco distributors in the Lakers’ territory, which includes all of
Southern California, Nevada and Hawaii.”)).
114 This number increases to three if the Comcast-controlled national networks are included. Compare 2007
Extension Order, 22 FCC Rcd at 17803-04, ¶ 19 and 17814-16, ¶ 37 with infra Appendix F. In the early 1990s
when the exclusive contract prohibition was adopted, 12 of the Top 15 national cable networks as ranked by average
prime time ratings were cable-affiliated. See Implementation of Section 19 of the Cable Television Consumer
Protection and Competition Act of 1992: Annual Assessment of the Status of Competition in the Market for the
Delivery of Video Programming, First Report, 9 FCC Rcd 7442, 7600 (1994) (“1st Annual Report”).
115 This number increases to four if the Comcast-controlled national networks are included. Compare 2007
Extension Order, 22 FCC Rcd at 17803-04, ¶ 19 and 17814-16, ¶ 37 with infra Appendix F. In the early 1990s
when the exclusive contract prohibition was adopted, 10 of the Top 25 national cable networks as ranked by
subscribership were cable-affiliated. See 1st Annual Report, 9 FCC Rcd at 7599.
116 See 2007 Extension Order, 22 FCC Rcd at 17814-16, ¶ 37.
117 This percentage increases to 30 percent if the Comcast-controlled RSNs are included. Compare 2007 Extension
Order, 22 FCC Rcd at 17805, ¶ 22 and 17814-16, ¶ 37 with infra Appendix G.
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necessary for competition and has no good substitutes.118 But Congress has provided the Commissionwith the authority to address such contracts on a case-by-case basis after the expiration of the
prohibition.119 Specifically, Sections 628(b), 628(c)(1), and 628(d) of the Act grant the Commission
broad authority to prohibit “unfair acts” of cable operators and their affiliated programmers that have the
“purpose or effect” of “hinder[ing] significantly or prevent[ing]” any MVPD from providing “satellite
cable programming or satellite broadcast programming to subscribers or consumers.”120 In addition, the
Commission has authority (i) pursuant to Section 628(c)(2)(B) of the Act to prohibit discrimination in the
prices, terms, and conditions for sale of satellite-delivered, cable-affiliated programming among
MVPDs;121 and (ii) pursuant to Section 628(c)(2)(A) of the Act to prohibit a cable operator from engaging
in undue or improper influence over the decision of its affiliated, satellite-delivered programmer to enter
into an exclusive contract.122 The Commission is committed to using this statutory authority to require
cable-affiliated programmers to license programming to competitors in appropriate cases, as demonstrated
by our recent actions on complaints involving terrestrially delivered, cable-affiliated RSNs.123 As
118 See DIRECTV Comments, Murphy Report at 28 (“Vertically integrated programmers will find it in their interest
to withhold precisely when withholding has the worst price impacts for consumers, i.e., in those cases where the
prices of the vertically integrated MVPD would fall the most and its competitor’s prices would increase the least if
the rival MVPD had access to the programming.”); DISH Comments, Wilkie Report at 8-9 (“For programming so
unpopular that its withdrawal induces minimal churn, there is little threat of foreclosure. However, for programming
that is pivotal and where the withdrawal induces significant churn, there is a very real threat of foreclosure . . . .”);
Letter from Rick Chessen, Senior Vice President, Law and Regulatory Policy, NCTA, to Marlene H. Dortch,
Secretary, FCC, MB Docket Nos. 12-68, 07-18, 05-192 (Sept. 7, 2012) (“NCTA Sept. 7, 2012 Ex Parte Letter”)
(attaching Dr. Mark Israel, An Economic Assessment of the Prohibition on Exclusive Contracts for Satellite-
Delivered, Cable-Affiliated Networks (“Israel Decl.”) at 15 (¶ 21) (“[T]here may be specific circumstances in which
a vertically integrated cable network’s refusal to license its content to unaffiliated MVPDs may have anti-
competitive effects. . . .”)).
119 We discuss the details of this case-by-case process below. See infra ¶¶ 51-64.
120 47 U.S.C. § 548(b); see 47 U.S.C. § 548(c)(1); 47 U.S.C. § 548(d). Vertically integrated cable operators and
their affiliated programmers agree that the Commission may address exclusive contracts on a case-by-case basis
pursuant to Section 628(b) after the expiration of the exclusive contract prohibition. See Comments of Cablevision
Systems Corp. (June 22, 2012), at 6-7, 11 (“The most sensible and appropriate means by which the Commission
could enable local market conditions to be taken into account would to be to allow the exclusivity ban to sunset and
rely upon Section 628(b) for case-by-case adjudications of exclusive arrangements that harm competition in local
markets.”) (“Cablevision Comments”); MSG Comments at 5, 17 (“Sunset of the blanket exclusivity ban would not
leave the Commission without tools to protect competition, when and where needed. . . . [A]ggrieved MVPDs and
the Commission can seek to bring the Section 628(b) general prohibition on unfair acts to bear.”); NCTA Comments
at 16 (“Section 628(b) will, of course, remain in effect as a safeguard against any anticompetitive effects of
particular conduct that may occur in a particular market or in particular circumstances . . . .”); Comcast Reply
Comments at 3 (“MVPDs that profess to be concerned about exclusive contracts will be able to bring claims under
Section 628(b) alleging that any particular exclusive contract is ‘unfair’ and will ‘hinder significantly or prevent’
any MVPD from providing video programming.”); TWC Reply Comments at 10 (“Under Section 628, the
Commission will continue to have the authority to evaluate allegations of unfair or deceptive practices on a case-by-
case basis, and that is the best mechanism for it to address any competitive issues that arise from exclusive
distribution arrangements.”); see also Discovery Comments at 11; NCTA Reply Comments at 10, 13; NCTA Sept.
7, 2012 Ex Parte Letter, Israel Decl. at 3-4 (¶ 8) (“evaluation of any particular exclusive contract should be based on
the merits of the arrangement in question, using the Commission’s established procedure for evaluating specific
exclusive arrangements”) (citing Section 628(b)) and 14 (¶ 18) (“a determination of whether or not exclusive
arrangements are harmful should be made on a case-by-case basis”).
121 See 47 U.S.C. § 548(c)(2)(B); see also 47 C.F.R. § 76.1002(b).
122 See 47 U.S.C. § 548(c)(2)(A).
123 See supra n.10.
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demonstrated in those proceedings, a case-by-case approach allows for an individualized assessment ofexclusive contracts based on the facts presented in each case.
32.
As some commenters note, however, the Commission in previous extension decisions
characterized a case-by-case process for addressing exclusive contracts as an inadequate substitute for the
“particularized protection” afforded by the exclusive contract prohibition.124 But the Commission reached
that conclusion on a much different factual record.125 Here, based on the decline during the past five
years in the amount of satellite-delivered, cable-affiliated programming among the most popular cable
networks, we can no longer conclude that a case-by-case process is insufficient to protect MVPDs from
the potential anticompetitive impact of exclusive contracts or that a preemptive ban continues to be
warranted.126 Moreover, our recent actions addressing complaints involving terrestrially delivered, cable-
affiliated RSNs demonstrates the adequacy of a case-by-case process.127
33.
Some commenters note that Congress has already established a case-by-case approach for
assessing exclusive contracts involving satellite-delivered, cable-affiliated programming.128 Specifically,
pursuant to Section 628(c)(4), a cable operator or a satellite-delivered, cable-affiliated programmer may
submit a “Petition for Exclusivity” to the Commission for approval to enforce or enter into an exclusive
contract by demonstrating that the contract serves the public interest.129 Some commenters claim that the
Commission could streamline this procedure rather than requiring MVPDs to pursue complaints.130 We
reject this contention. Given the decline during the past five years in the amount of satellite-delivered,
124 2002 Extension Order, 17 FCC Rcd at 12153-54, ¶ 65 n.206; see 2007 Extension Order, 22 FCC Rcd at 17834-
35, ¶ 62 n.320; see also DIRECTV Comments at 48-49; APPA Reply Comments at 8.
125 In fact, while finding at the time that a case-by-case process was an inadequate substitute for the broad,
prophylactic exclusive contract prohibition, the Commission simultaneously acknowledged that the prohibition was
“temporary” and would apply only “for the period necessary to preserve and protect competition,” thus recognizing
that a case-by-case process would eventually replace the prohibition. 2002 Extension Order, 17 FCC Rcd at 12153-
54, ¶ 65 n.206.
126 The Commission’s conclusions in the Comcast/NBCU Order do not require a different result. See ACA
Comments at 7-8; DIRECTV Comments at 11-12; DISH Comments at 9-10; OPASTCO/NTCA Comments at 4;
ACA Reply Comments at 14-15; see also CenturyLink Comments at 12. In that proceeding, based on an extensive
factual record in the context of an adjudication, the Commission found that the “record evidence supports a finding
that without Comcast-NBCU’s suite of RSN, local and regional broadcast and national cable programming, other
MVPDs likely would lose significant numbers of subscribers to Comcast, substantially harming those MVPDs that
compete with Comcast in video distribution.” Comcast/NBCU Order, 26 FCC Rcd at 4254, ¶ 37 (footnotes
omitted). Moreover, the Commission found that “this anticompetitive exclusionary program access strategy would
often be profitable for Comcast.” Id. at 4257-58, ¶ 44. The Commission’s findings with respect to that transaction,
which involved the nation’s largest cable operator both in terms of subscribers and number of cable networks
owned, do not compel the same conclusion with respect to all other vertically integrated cable operators. Indeed, the
Commission specifically noted that “[a]ll adjudicatory findings are fact specific and based on the evidence in the
record in a specific matter.” Id. at 4258, ¶ 45. Moreover, consistent with the case-by-case approach we describe
herein, the Commission explained that “[a]n assessment of the consequences of foreclosure of the programming at
issue in a particular transaction must be made on a case-by-case basis, considering whether the foreclosure to rival
MVPDs of access to the specific programming networks offered by the parties to the transaction likely would result
in the loss of subscribers to MVPDs having access.” Id. at 4258, ¶ 45 n.109.
127 See supra n.10.
128 See AT&T Comments at 4-5, 27-28; DIRECTV Comments at 3-4, 26-27; ITTA Comments at 8; DIRECTV
Reply Comments at 17-18; Reply Comments of DISH Network L.L.C. (July 23, 2012), at 5-6 (“DISH Reply
Comments”); Verizon Reply Comments at 2.
129 See supra nn.20-21 and accompanying text.
130 See AT&T Comments at 28; DIRECTV Reply Comments at 11-12, 17-18.
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cable-affiliated programming among the most popular cable networks, we find no basis to continue topreemptively ban exclusive contracts and to place the burden on cable operators or their affiliated
programmers to demonstrate that an exclusive contract serves the public interest before entering into or
enforcing the contract.131 Indeed, relying on the Petition for Exclusivity process to avoid the expiration of
the prohibition would mean that the prohibition would never expire, contrary to Congress’s direction.132
34.
We recognize the possibility that the expiration of the exclusive contract prohibition may
result in cable operators acquiring additional programming, including “must have” programming, and
then entering into exclusive contracts for such programming.133 We also recognize the possibility that
some existing satellite-delivered, cable-affiliated programming may increase in popularity in the future.
The record, however, provides no basis on which to predict the likelihood of these developments or their
impact on competition.134 Indeed, such developments seem contrary to current market trends, as
discussed above.135 Given this, extending the prohibition based simply on the chance of a reversal in
industry trends would be at odds with Congress’ inclusion of a sunset provision.136 Moreover, even if a
marketplace reversal were to occur, the Commission has the tools in place to address these developments,
either on a case-by-case basis in response to complaints, which include a rebuttable presumption of
“significant hindrance” for RSNs, or by adopting rules pursuant to Section 628(b) that prohibit certain
types of exclusive contracts involving cable-affiliated programming.137
131 See supra nn.18, 20-21 and accompanying text.
132 See Cablevision I, 597 F.3d at 1314 (stating that the court expects that “the Commission will weigh heavily
Congress’s intention that the exclusive contract prohibition will eventually sunset”).
133 See NPRM, 27 FCC Rcd at 3434, ¶ 37 (seeking comment on whether allowing cable operators to enter into
exclusive contracts with satellite-delivered, cable-affiliated programmers will result in the acquisition of existing
programming networks by cable operators, thereby increasing vertical integration).
134 See DIRECTV Comments at 22-23 (“[W]hile ESPN is not cable-affiliated (and has never been withheld), the
Commission must consider the possibility that a cable operator and Disney might engage in a transaction through
which ESPN would become cable-affiliated.”); see also ACA Comments at 11; Letter from Barbara S. Esbin,
Counsel for ACA, to Marlene H. Dortch, Secretary, FCC, MB Docket Nos. 12-68, 07-18, 05-192 (Oct. 1, 2012)
(discussing non-cable-affiliated national sports networks (ESPN, TNT, TBS)) (“ACA Oct. 1, 2012 Ex Parte
Letter”); but see Comcast Reply Comments at 5 n.13 (referring to DIRECTV’s concerns as “mere speculation of
future vertical integration based on hypothetical transactions”).
135 See supra ¶¶ 29-30.
136 See supra n.132.
137 See supra ¶ 25. Some commenters also speculate that cable operators will enter into exclusive contracts covering
a bundle of cable-affiliated networks, which has a more harmful impact on competitors than an exclusive contract
involving a single network. See AT&T Comments at 20; DIRECTV Comments at 20-21, Murphy Report at 28-29;
DISH Comments at 7, Wilkie Report at 3, 19-22; DIRECTV Reply Comments at 4-5. Should this occur, however,
the Commission will be able to address these situations post-sunset pursuant to the provisions of Section 628 that do
not sunset. The Commission’s conclusions in the Comcast/NBCU Order do not require a different result. See
DIRECTV Comments at 20-21; ACA Reply Comments at 11-12 n.36. In that proceeding, the Commission found
that the “evidence suggests that the overall bundle of NBCU cable networks is critical programming that MVPDs
need to offer a competitive service that is attractive to consumers even if no individual network in the bundle were
considered ‘marquee’ programming.” Comcast/NBCU Order, 26 FCC Rcd at Appendix B, 4395-96, ¶ 46. As
discussed above, this conclusion was based on an extensive factual record in the context of an adjudication
involving the nation’s largest cable operator, both in terms of subscribers and number of cable networks owned, and
does not compel the same conclusion with respect to all other vertically integrated cable operators. See supra n.126.
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c.Additional Factors Weighing in Favor of Expiration of the Exclusive
Contract Prohibition
We find additional factors also weigh in favor of our decision to decline to extend the
prohibition beyond its sunset date. First, as both Congress and the Commission have specifically
recognized, exclusive contracts may result in the procompetitive benefit of increasing investment in
programming in some cases, thereby promoting competition and diversity in the video programming
market.138 Vertically integrated cable operators and cable-affiliated programmers note that expiration of
the prohibition will provide cable operators with an incentive to increase their investment in programming
ventures, particularly local and regional programming.139 They also claim that exclusivity is critical to
programmers for the following reasons: (i) a new service with limited interest may be able to gain
carriage only if it can provide a distributor with exclusive carriage;140 (ii) exclusivity may be critical for a
niche network that targets a particular audience;141 (iii) a programmer may wish to enter into an exclusive
138 See 47 U.S.C. § 548(c)(4) (listing factors that weigh in favor of an exclusive contract, including the effect of the
exclusive contract on the “attraction of capital investment in the production and distribution of new satellite cable
programming” and the “diversity of programming in the multichannel video programming distribution market”);
NECN Exclusivity Petition, 9 FCC Rcd at 3236, ¶ 33 (“Congress recognized that exclusivity arrangements are
typically used by suppliers to create incentives for distributors to aggressively promote and sell a particular product.
In this manner, exclusive distribution may be offered to engender distributor support for a fledgling service to help it
gain a foothold in the market.”); id. at 3237, ¶ 40 (“exclusivity may promote diversity in the programming market
when used to provide incentives for cable operators to promote and carry a new and untested programming
service”); see also 2007 Extension Order, 22 FCC Rcd at 17835, ¶ 63 (“We recognize the benefits of exclusive
contracts and vertical integration cited by some cable MSOs, such as encouraging innovation and investment in
programming . . . .”); 1993 Program Access Order, 8 FCC Rcd at 3385, ¶ 65 (“Particularly with respect to new
programming, we recognize that there may well be circumstances in which exclusivity could be shown to meet the
public interest test, especially when the launch of local origination programming is involved that may rely heavily
on exclusivity to generate financial support due to its more limited appeal to a specific regional market.”); see id. at
3385, ¶ 65 n.83 (“[I]t is possible that local or regional news channels could be economically infeasible absent an
exclusivity agreement.”).
139 See Cablevision Comments at 2, 7-9 (“The benefits of exclusivity are evident from Cablevision’s investment in
terrestrially-delivered local programming, which has always been free from the ban. . . . Cablevision invests in these
services in part to differentiate its products from rival MVPDs, and that freedom was critical to Cablevision’s
willingness to invest.”); Comcast Comments at 12-13 (“[A]llowing the exclusivity prohibition to sunset will create
new incentives for investing in innovative programming.”); Discovery Comments at 8-11 (“Allowing exclusivity . . .
encourages investment and innovation in programming by reducing the substantial risks associated with developing
a new programming service by allowing programmers to share both the risks and rewards of developing a new
service with their distributors.”); MSG Comments at 17-19 (“[T]he ability to engage in exclusive contracts
encourages programmer investment and innovation in new programming.”); TWC Comments at 13-15 (“[T]he
exclusivity ban is thwarting competition by reducing cable operators’ incentive to invest in new and existing
programming.”); Comcast Reply Comments at 6; Reply Comments of the Madison Square Garden Company (July
23, 2012), at 6-7 (“[C]onsumers benefit when an exclusivity arrangement encourages a cable operator to share in the
investment and risks associated with launching a new programming network, without which the programmer might
not be able to develop the programming.”) (“MSG Reply Comments”); TWC Reply Comments at 5; NCTA Sept. 7,
2012 Ex Parte Letter, Israel Decl. at 15-16 (¶ 21).
140 See Discovery Comments at 8-9; MSG Reply Comments at 7; see also NECN Exclusivity Petition, 9 FCC Rcd at
3236, ¶¶ 33-34.
141 See Discovery Comments at 9 (“Without exclusivity, a distributor might not otherwise agree to carriage of the
network, because there might not be enough target customers overall to warrant dedication of limited channel space
unless the distributor was reasonably certain of securing a significant amount of the target audience.”); MSG
Comments at 22; MSG Reply Comments at 7.
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arrangement to reduce or share the risks with a cable operator;142 and (iv) exclusivity enhances theincentive of the cable operator to market and publicize the network.143 Moreover, expiration of the
exclusive contract prohibition may also encourage other MVPDs or non-MVPD-affiliated programmers
to create programming to counteract any exclusives involving cable operators, thereby leading to more
competition and diversity in the video programming market.144 The Commission recognized this benefit
in the 2010 Program Access Order, explaining that, “[i]f particular programming is replicable, our
policies should encourage MVPDs or others to create competing programming, rather than relying on the
efforts of others, thereby encouraging investment and innovation in programming and adding to the
diversity of programming in the marketplace.”145
36.
Some MVPDs question the potential for procompetitive benefits resulting from exclusive
contracts involving satellite-delivered, cable-affiliated programming, noting that exclusive contracts
involving non-cable-affiliated programmers are rare146 and that the Commission previously noted an
increase in programming networks over time despite the exclusive contract prohibition.147 Nevertheless,
142 See Discovery Comments at 9-10 (“If the new service is successful, it gains wide distribution; if not, generally
only the programmer bears the consequences of the failure. Allowing exclusivity, however, encourages investment
and innovation in programming by reducing the substantial risks associated with developing a new programming
service by allowing programmers to share both the risks and rewards of developing a new service with their
distributors.”); MSG Comments at 18-19; MSG Reply Comments at 7.
143 See Discovery Comments at 10; MSG Comments at 19.
144 See Cablevision Comments at 5, 9 (“DBS operators and telcos have the resources to counter exclusivity by cable
by engaging in their own exclusive arrangements, developing their own programming, or engaging in a wide range
of competitive counter-measures – as occurs in response to exclusivity in all other competitive markets.”);
Discovery Comments at 11 (“In addition to direct benefits, exclusivity has the potential to create indirect benefits.
As the Commission has acknowledged, when one distributor offers exclusive content, it can encourage investment
by rival distributors to create content of their own.”); MSG Comments at 9-10, 19-22 (“[E]xclusivity enhances
competition in video service markets through increased investment in programming by MVPDs that, facing
competition from a rival that has exclusive programming, seek to differentiate their own services to consumers with
new or improved program offerings – perhaps through their own exclusive arrangements with programmers.”);
MSG Reply Comments at 7 (“Consumers who are customers of other MVPDs also benefit . . . when their provider,
in response to an exclusive arrangement, develops new programming, cuts prices, or offers quality and service
improvements to offset the attractiveness of the exclusive offering.”); NCTA Reply Comments at 10; NCTA Sept. 7,
2012 Ex Parte Letter, Israel Decl. at 15-18 (¶¶ 21-23).
145 2010 Program Access Order, 25 FCC Rcd at 750-51, ¶ 9. Some MVPDs claim that they do not have sufficient
resources to invest in the creation of programming. See CenturyLink Comments at 18; ITTA Comments at 7;
USTelecom Comments at 12; OPASTCO/NTCA Reply Comments at 4. Vertically integrated cable operators
respond by noting that certain MVPDs, such as DIRECTV, DISH, Verizon, and AT&T, are large, established
companies with significant resources. See Cablevision Comments at 5; MSG Comments at 9; see also NCTA Reply
Comments at 10. At least with respect to regional programming, however, the Commission has noted that national
distributors such as DBS operators do not have an economic base for substantial investment in regional
programming. See 2007 Extension Order, 22 FCC Rcd at 17830-31, ¶ 55; 2002 Extension Order, 17 FCC Rcd at
12151, ¶ 59. Even if MVPDs lack resources to create their own programming to counteract an exclusive contract,
however, non-MVPD-affiliated programmers may fill the void by creating competing programming to license to
competitive MVPDs, thereby leading to even greater diversity in the video programming market. See Comcast
Comments at 12; see also NCTA Comments at 14.
146 See AT&T Comments at 5, 27; DIRECTV Comments at 26-34, Murphy Report at 15-18; AT&T Reply
Comments at 6; DIRECTV Reply Comments at 8-9; DISH Reply Comments at 3-5; Verizon Reply Comments at 3-
4.
147 2007 Extension Order, 22 FCC Rcd at 17836-37, ¶ 64; see id. at 17838-39, ¶ 66; 2002 Extension Order, 17 FCC
Rcd at 12153, ¶ 64; see also AT&T Comments at 5, 27; CenturyLink Comments at 18 n.47; DISH Comments at 6
n.13; AT&T Reply Comments at 6; DIRECTV Reply Comments at 8-9.
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Congress specifically recognized the benefits of exclusive contracts in some cases, as demonstrated by itsmandate that the Commission allow the exclusive contract prohibition to expire when it is no longer
“necessary” to preserve and protect competition and diversity in the video distribution market.148
37.
Second, the Commission has recognized that exclusive contracts may result in the
procompetitive benefit of allowing MVPDs to differentiate their service offerings.149 To be sure, the issue
of whether the procompetitive benefits of product differentiation outweigh the anticompetitive harms is a
fact-specific determination best handled on a case-by-case basis.150 But, at least in some markets, it is
possible that consumers will benefit from increased competition in the video distribution market when
MVPDs differentiate their service offerings and thereby invite competitive countermeasures from their
rivals.151
38.
Third, declining to extend the exclusive contract prohibition beyond its sunset date and
relying instead on a case-by-case process is consistent with our First Amendment obligations152 and
148 47 U.S.C. § 548(c)(5); see S. Rep. No. 102-92 (1991), at 28, reprinted in 1992 U.S.C.C.A.N. 1133, 1161 (“The
Committee believes that exclusivity can be a legitimate business strategy where there is effective competition.”); see
also Cablevision II, 649 F.3d at 721 (stating that Congress “recogni[zed] that vertical integration and exclusive
dealing arrangements are not always pernicious and, depending on market conditions, may actually be
procompetitive”); id. (explaining that the framework Congress adopted for exclusive arrangements involving
satellite-delivered, cable-affiliated programming “accords with the generally accepted view in antitrust and other
areas that exclusive contracts may have both procompetitive and anticompetitive purposes and effects”).
149 See 2007 Extension Order, 22 FCC Rcd at 17835, ¶ 63 (“We recognize the benefits of exclusive contracts and
vertical integration cited by some cable MSOs, such as . . . allowing for ‘product differentiation’ among
distributors.”); see also Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13169-70, ¶ 29 (“We do not
dispute that product differentiation strategies may be procompetitive in many instances . . . .”), affirmed, Verizon v.
MSG/Cablevision (Commission Order), 26 FCC Rcd 15849; AT&T v. MSG/Cablevision (Bureau Order), 26 FCC Rcd
at 13232-33, ¶ 30 (same), affirmed, AT&T v. MSG/Cablevision (Commission Order), 26 FCC Rcd 15871, appeal
pending sub nom. Cablevision Sys. Corp. et al. v. FCC, No. 11-4780 (2nd Cir.). Some commenters claim that
exclusivity will harm consumers because no consumer could access the full range of programming available without
having to subscribe to more than one service. See WGA-W Comments at 5; DISH Reply Comments at 2. This
argument, however, is not specific to cable-affiliated programming. Rather, it is an argument against any type of
exclusive programming arrangement, including those involving non-cable-affiliated programming that is not
covered by the exclusive contract prohibition. Moreover, despite this alleged drawback of exclusivity, Congress has
specifically found that exclusive contracts may have countervailing procompetitive benefits in some cases. See
supra nn.138, 148.
150 See Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13166-77, ¶¶ 24-41 (finding that the
anticompetitive effects of a product differentiation strategy outweighed any procompetitive benefits), affirmed,
Verizon v. MSG/Cablevision (Commission Order), 26 FCC Rcd 15849; AT&T v. MSG/Cablevision (Bureau Order), 26
FCC Rcd at 13229-40, ¶¶ 25-42 (same), affirmed, AT&T v. MSG/Cablevision (Commission Order), 26 FCC Rcd
15871, appeal pending sub nom. Cablevision Sys. Corp. et al. v. FCC, No. 11-4780 (2nd Cir.).
151 See MSG Reply Comments at 10-11 (referring to countermeasures such as price cutting, service improvements,
and emphasis on unique offerings); see also id. at 7; Cablevision Comments at 5; Discovery Comments at 11; MSG
Comments at 19-20; NCTA Reply Comments at 10; NCTA Sept. 7, 2012 Ex Parte Letter, Israel Decl. at 17 (¶ 22).
The Commission in the 2007 Extension Order found that the ability of MVPDs to engage in competitive
countermeasures did not mitigate the impact of being unable to offer essential programming, as demonstrated by the
material adverse impact on competition in the video distribution market resulting from withholding of RSNs in San
Diego and Philadelphia. See 2007 Extension Order, 22 FCC Rcd at 17833-34, ¶ 61. For the reasons discussed
herein, given market developments since 2007, we find no basis to assume that the anticompetitive impact of
exclusive arrangements always outweighs the procompetitive benefits.
152 See Cablevision II, 649 F.3d at 710-14 (upholding under the First Amendment the Commission’s decision to
consider “unfair acts” involving terrestrially delivered, cable-affiliated programming on a case-by-case basis; stating
that “[a]lthough it is true that competition in the MVPD industry has generally increased even absent rules
(continued….)
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promotes the goals of Executive Order 13579 and the Commission’s plan adopted consistent with theExecutive Order, whereby the Commission analyzes rules that may be outmoded, ineffective, insufficient,
or excessively burdensome and determines whether any such regulations should be modified, streamlined,
or repealed.153 In today’s marketplace, a nuanced, narrower, case-by-case approach that meets the
statutory objectives is more appropriate than the blunt regulatory tool of a prohibition that preemptively
bans all exclusive contracts and places the burden on the proponent of exclusivity to demonstrate how the
exclusive contract serves the public interest before entering into or enforcing the contract.154
39.
Fourth, our action here promotes regulatory parity by treating satellite-delivered and
terrestrially delivered programming similarly. Specifically, we will now consider all exclusive contracts
involving cable-affiliated programming on a case-by-case basis in response to complaints, regardless of
whether the programming is satellite-delivered or terrestrially delivered. Nothing in the record here
establishes any basis for continuing to apply a preemptive prohibition to exclusive contracts involving
satellite-delivered, cable-affiliated programming while assessing exclusive contracts involving
terrestrially delivered, cable-affiliated programming on a case-by-case basis.155 Achieving parity in
treatment between these two types of programming will remove any uncertainty and confusion
surrounding which regulatory approach (preemptive prohibition or case-by-case) applies. In addition,
parity in regulatory treatment will help to ensure that business reasons, rather than regulatory distinctions,
drive the decision whether to deliver programming by satellite or terrestrial means.
40.
Fifth, we expect that any enforcement of exclusive contracts in the near term will be
limited by the terms of existing affiliation agreements. In the NPRM, the Commission sought comment
restricting terrestrial withholding, nothing prevents the Commission from addressing any remaining barriers to
effective competition with appropriately tailored remedies”); id. at 721 (stating that “one reason why [the
Commission’s] rules survive First Amendment scrutiny” is that the Commission “has substantially narrowed the
scope of its regulations by focusing on the effect of terrestrial withholding in individual cases”); see also 2010
Program Access Order, 25 FCC Rcd at 776-77, ¶ 44 (“We decline to adopt a broad prophylactic rule that subjects
all terrestrially delivered, cable-affiliated programming to the program access rules because we lack sufficient record
evidence to reach general conclusions that unfair acts involving terrestrially delivered, cable-affiliated programming
will always prevent or significantly hinder an MVPD from providing video services. . . . [O]ur action today
addresses any legitimate concerns about tailoring by adopting a case-by-case evaluation rather than a broad
prophylactic rule.”).
153 See Executive Order No. 13579, § 2, 76 FR 41587 (July 11, 2011); Final Plan for Retrospective Analysis of
Existing Rules, 2012 WL 1851335 (May 18, 2012).
154 See TWC Comments at 12-16 (“The [exclusive contract prohibition] inappropriately presumes that exclusive
contracts would cause competitive harm, rather than requiring complainants or the Commission to demonstrate such
harm before infringing on the speech of cable operators and their affiliated programmers. A number of less
restrictive alternatives for addressing potentially harmful exclusivity arrangements are available under Section 628
that would appropriately place the burden on complainants.”); Cablevision Comments at 7, 9-10; Comcast
Comments at 9-10; NCTA Comments at 17-18; Comcast Reply Comments at 7; TWC Reply Comments at 2; but see
Verizon Comments at 11-12 (arguing that extension of the exclusive contract prohibition would withstand
intermediate scrutiny); AT&T Reply Comments at 9-11; DIRECTV Reply Comments at 2, 12-26; Verizon Reply
Comments at 7-8.
155 See NPRM, 27 FCC Rcd at 3431-32, ¶ 32 (asking whether there is any basis for treating satellite-delivered, cable-
affiliated programming and terrestrially delivered, cable-affiliated programming differently with respect to the
exclusive contract prohibition and whether there are differences between satellite-delivered programming and
terrestrially delivered programming that would result in cable operators having a greater ability and incentive to
favor affiliates providing satellite-delivered programming); 2010 Program Access Order, 25 FCC Rcd at 759, ¶ 21
(finding that “unfair acts” involving cable-affiliated programming may harm competition in the video distribution
market “regardless of whether that programming is satellite-delivered or terrestrially delivered”); Adelphia Order,
21 FCC Rcd at 8276, ¶ 162.
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on which of two alternative scenarios would occur after the expiration of the exclusive contractprohibition: (i) existing affiliation agreements allow programmers to terminate or modify their existing
agreements immediately on the effective date of the sunset and to instead enter into exclusive contracts
with cable operators; or (ii) existing affiliation agreements require programmers to continue to provide
their programming to MVPDs for the duration of the term of the affiliation agreements despite the
expiration of the exclusive contract prohibition.156 In response, no commenter claimed that expiration of
the exclusive contract prohibition would allow cable-affiliated programmers to immediately terminate
existing agreements. Rather, one commenter noted that programmers have contractual commitments to
continue to provide their programming to MVPDs despite the expiration of the exclusive contract
prohibition.157 Thus, enforcement of exclusive contracts in the near term will be limited, thereby
effectively deferring the period that exclusive contracts will begin to be enforced.
d.
Impact of the Expiration of the Exclusive Contract Prohibition on
Competition and Consumers
Some commenters claim that declining to extend the exclusive contract prohibition
beyond its sunset date and relying instead on a case-by-case process will harm competition, consumers,
and MVPDs. We find these claims unpersuasive. First, they claim that a case-by-case complaint process
is burdensome and time-consuming, especially for smaller MVPDs.158 These claims are based on the
length of time needed to resolve complaints involving terrestrially delivered RSNs, such as the recent
Verizon v. MSG/Cablevision and AT&T v. MSG/Cablevision cases.159 In those decisions, however, the
Media Bureau specifically noted certain atypical circumstances that resulted in a delay in resolution of the
complaints.160 We do not expect that complaints challenging exclusive contracts involving satellite-
delivered, cable-affiliated programming will present similarly atypical circumstances. In any event, for
the reasons discussed below, we establish a six-month deadline (calculated from the date of filing of the
156 See NPRM, 27 FCC Rcd at 3457-58, ¶ 84.
157 One cable-affiliated programmer noted that “most, if not all, of the handful of programming networks deemed
affiliated with a cable operator that would be afforded relief from elimination of the exclusivity ban likely have
contractual commitments with MVPDs for some period of time going forward, thereby further minimizing the
prospect that a sunset could have any near-term effect should any such programming network elect to pursue an
exclusive arrangement for an existing service.” MSG Comments at 12.
158 See AT&T Comments at 3-4, 19-20, 23-26; CenturyLink Comments at 19-21; DIRECTV Comments at 40-42;
Iowa Telcos Comments at 5; ITTA Comments at 2-3, 7 n.17, 9-10; OPASTCO/NTCA Comments at 7-8;
USTelecom Comments at 13-14; APPA Reply Comments at 8-9; DIRECTV Reply Comments at 7.
159 See supra n.10.
160 The unusual circumstances at play in those cases included the following: (i) the complaints were filed after the
Commission had initiated a rulemaking proceeding considering the threshold legal issue in the case (i.e., whether
unfair acts involving terrestrially delivered, cable-affiliated programming could be challenged pursuant to Section
628(b)); (ii) the Commission issued an order in the rulemaking proceeding (the 2010 Program Access Order)
resolving this issue after the pleading cycle on the complaints had closed; (iii) the 2010 Program Access Order
required the complainants to supplement their complaints to the extent they wanted to take advantage of the new
rules adopted therein (including a rebuttable presumption of significant hindrance for RSNs), which both
complainants did once the rules took effect after being approved by the Office of Management and Budget under the
Paperwork Reduction Act of 1995; (iv) the 2010 Program Access Order provided the defendants with 45 days to
answer the supplement and provided the complainant with 15 days to reply; (v) after post-discovery briefing was
completed, the D.C. Circuit vacated one part of the 2010 Program Access Order – the Commission’s decision to
treat certain acts involving terrestrially delivered, cable-affiliated programming as categorically “unfair”; and (vi)
the parties made several additional filings and the staff conducted meetings with the parties to address the D.C.
Circuit’s decision. See Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13153, ¶ 9 n.51; AT&T v.
MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13214, ¶ 9 n.52; 2010 Program Access Order, 25 FCC Rcd at 751,
¶ 10, 756-57, ¶ 17, 785, ¶ 55, 789, ¶ 64 n.237.
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complaint) for the Media Bureau to act on a complaint alleging a denial of programming.161 Somecommenters also claim that a complainant will not have access to the programming subject to the
exclusive contract during the pendency of the complaint, thereby harming the complainant’s ability to
attract and retain subscribers.162 As the Commission explained in the 2010 Program Access Order,
however, a complainant may seek a standstill of an existing programming contract during the pendency of
a complaint.163 Moreover, to the extent MVPDs are concerned about the costs of pursuing a complaint,
they may seek to join with other MVPDs in pursuing a complaint to share those costs.164 An exclusive
contract results in one cable operator having access to a particular cable-affiliated programming network
or networks in a given geographic area, to the exclusion of every other MVPD competing in that
geographic area. Accordingly, unlike a selective refusal to license where a cable-affiliated programmer
withholds programming from one rival MVPD, an exclusive contract impacts every MVPD competing in
the geographic area subject to the exclusive contract. For example, if a satellite-delivered, cable-affiliated
RSN enters into an exclusive contract with an incumbent cable operator for each franchise area within a
DMA, there are at least two DBS operators as well as potentially several telcos and cable overbuilders
that will be impacted by the exclusive contract and that can seek to join as complainants in challenging
the contract.
42.
Second, some commenters claim that expiration of the exclusive contract prohibition will
hinder the deployment of broadband.165 They note that the Commission in the 2010 Program Access
Order explained that a wireline firm’s decision to deploy broadband is linked to its ability to offer video
and that unfair acts involving terrestrially delivered, cable-affiliated programming that impede the ability
of MVPDs to provide video service can also impede the ability of MVPDs to provide broadband
services.166 The Commission, however, did not address this concern by adopting a preemptive ban on
exclusive contracts and other allegedly unfair acts involving terrestrially delivered, cable-affiliated
programming.167 Rather, the Commission adopted a case-by-case approach for addressing these allegedly
unfair acts, which is precisely the approach we rely on here.168 As in the 2010 Program Access Order, we
161 See infra ¶¶ 63-64.
162 See AT&T Comments at 26; ITTA Comments at 10.
163 See 2010 Program Access Order, 25 FCC Rcd at 794-97, ¶¶ 71-75; see also 47 C.F.R. § 76.1003(l). We also
seek comment in the FNPRM on whether to establish a rebuttable presumption that a complainant challenging an
exclusive contract involving a cable-affiliated RSN (regardless of whether it is terrestrially delivered or satellite-
delivered) is entitled to a standstill of an existing programming contract during the pendency of a complaint. See
infra ¶¶ 78-79.
164 See WaveDivision Holdings, LLC, Horizon Cable TV, Inc., Stanford University, and the City of San Bruno,
California v. Comcast Corporation et al., Order, 26 FCC Rcd 182, 182, ¶ 1 (MB 2011) (noting settlement of a
program access complaint filed on behalf of four MVPDs).
165 See CenturyLink Comments at 18; ITTA Comments at 2, 8-9; OPASTCO/NCTA Comments at 6; USTelecom
Comments at 10, 23-25; APPA Reply Comments at 6-7.
166 See 2010 Program Access Order, 25 FCC Rcd at 771-72, ¶ 36 (citing Implementation of Section 621(A)(1) of the
Cable Communications Policy Act of 1984 as Amended by the Cable Television Consumer Protection and
Competition Act of 1992, Report and Order and Further Notice of Proposed Rulemaking, 22 FCC Rcd 5101, 5132-
33, ¶ 62 (2006) (“The record here indicates that a provider’s ability to offer video service and to deploy broadband
networks are linked intrinsically, and the federal goals of enhanced cable competition and rapid broadband
deployment are interrelated.”) (citation omitted), aff’d., Alliance for Community Media v. FCC, 529 F.3d 763 (6th
Cir. 2008)); see also Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13175-76, ¶ 38 and 13176-77, ¶ 40;
AT&T v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13238-39, ¶ 39 and 13239-40, ¶ 41.
167 See 2010 Program Access Order, 25 FCC Rcd at 770-71, ¶ 35.
168 See id.
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believe that a case-by-case process will protect MVPDs from the potential anticompetitive impact ofexclusive contracts, including the impact on broadband deployment.
43.
Third, although some commenters claim that expiration of the exclusive contract
prohibition will have a particularly adverse impact on new entrants in the video distribution market,
including small and rural MVPDs, 169 we note that the expiration of the exclusive contract prohibition
does not impact the ability of MVPDs to challenge selective refusals to license.170 Specifically, to the
extent that these concerns are based on fear that cable-affiliated programmers will single out certain
MVPDs (such as a satellite provider or a new entrant with a small subscriber base) and withhold
programming from them,171 as discussed below, such programmers will face the prospect of a complaint
alleging non-price discrimination in violation of Section 628(c)(2)(B).172
44.
Fourth, DISH claims that expiration of the exclusive contract prohibition will result in
increased programming costs for MVPDs by providing cable-affiliated programmers with increased
leverage in negotiations based on threats to provide a competing cable operator with exclusivity.173 As
with certain other concerns mentioned above, this concern is not specific to cable-affiliated programming
and argues against any type of exclusive programming arrangement.174 In addition, DISH provides no
evidence that non-cable-affiliated programmers have used such threats in programming negotiations.
Moreover, as mentioned above, Congress specifically recognized the procompetitive benefits of
exclusivity in some cases.175 DISH offers no basis to conclude that this singular concern about increased
programming costs outweighs the potential procompetitive benefits of exclusivity envisioned by
Congress.
169 See Blooston Rural Video Providers Comments at 6; CenturyLink Comments at 2, 16-17; ITTA Comments at 3-
5; OPASTCO/NTCA Comments at 5-6; USTelecom Comments at 12-15, 19-23. To the extent these concerns are
based on the alleged burdens of the case-by-case complaint process, we address these concerns herein. See supra ¶
41 and infra ¶¶ 63-64.
170 See 47 U.S.C. § 548(c)(2)(B).
171 See CenturyLink Comments at 2 (“[C]able operators and their affiliated programmers retain at least the same
ability and incentive to withhold critical programming from new entrant and smaller MVPDs as they did five years
ago.”); id. at 16-17 (“smaller MVPDs simply offer fewer ‘eyeballs’ compared to larger MVPDs, and thus are at
greater risk that a cable-affiliated programmer would either decline to provide that programming to the MVPD or
would demand terms and/or prices that were more onerous than those provided to larger MVPDs for the same
programming”); USTelecom Comments at 12 (“Given the opportunity, vertically integrated MVPDs will not
hesitate to withhold their programming from new MVPD entrants.”); see also AT&T Comments at 21-22 (noting an
example where the HD versions of cable-affiliated RSNs were withheld from AT&T and Verizon, but not from
DIRECTV).
172 See infra ¶ 61. Some commenters claim that the emergence since 2007 of distributors of video programming
over the Internet justifies extension of the exclusive contract prohibition, claiming that vertically integrated cable
operators have an enhanced incentive to withhold programming from potential new sources of competition. See
DISH Reply Comments at 6-7; see also Free Press Comments at 7. Even assuming that these distributors qualify as
MVPDs entitled to the benefits of the program access rules, however, this type of selective refusal to license would
be addressed pursuant to the discrimination provision in Section 628(c)(2)(B). See Media Bureau Seeks Comment
on Interpretation of the Terms “Multichannel Video Programming Distributor” and “Channel” as Raised in
Pending Program Access Complaint Proceeding, MB Docket No. 12-83, Public Notice, 27 FCC Rcd 3079 (MB
2012).
173 See DISH Comments at 3, 13-14.
174 See supra n.149.
175 See supra nn.138, 148.
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45.As the preceding analysis makes clear, the benefits of our decision to decline to extend
the exclusive contract prohibition beyond its sunset date will outweigh any potential costs.176 We believe
that the case-by-case approach for considering exclusive contracts — which will allow the Commission to
consider the unique facts and circumstances of each case — will be sufficient to protect MVPDs,
including small, rural, and new entrant MVPDs, in their efforts to compete and will minimize the alleged
costs of allowing the exclusive contract prohibition to sunset.177 We also expect that the following
additional factors will further reduce these alleged costs: (i) a significant percentage of satellite-
delivered, cable-affiliated programming is subject until January 2018 to program access merger
conditions adopted in the Comcast/NBCU Order, which require Comcast/NBCU to make these networks
available to competitors even after the expiration of the exclusive contract prohibition;178 (ii) we expect
that any enforcement of exclusive contracts in the near term will be limited by the terms of existing
affiliation agreements;179 (iii) even after the expiration of the exclusive contract prohibition, a satellite-
delivered, cable-affiliated programmer’s refusal to license its content to a particular MVPD (such as a
small, rural, or new entrant MVPD), while simultaneously licensing its content to other MVPDs
competing in the same geographic area, will continue to be a violation of the discrimination provision in
Section 628(c)(2)(B), unless the programmer can establish a “legitimate business reason” for the conduct
in response to a program access complaint challenging the conduct;180 and (iv) if the expiration of the
exclusive contract prohibition results in harm to consumers or competition on a broad scale, we have
statutory authority pursuant to Section 628(b) of the Act to take remedial action by adopting rules,
including a prohibition on certain types of exclusive contracts involving cable-affiliated programming, to
address these concerns.181
46.
We acknowledge that a case-by case approach will result in certain costs by requiring
affected parties and the Commission to expend time and resources litigating and resolving complaints.182
We find, however, that certain factors will help to minimize these costs. Below, we establish a rebuttable
presumption that an exclusive contract involving a satellite-delivered, cable-affiliated RSN has the
purpose or effect set forth in Section 628(b).183 This presumption will reduce costs by eliminating the
need for litigants and the Commission to undertake repetitive examinations of Commission precedent and
176 See NPRM, 27 FCC Rcd at 3439, ¶ 49 (seeking comment on the costs and benefits of moving from a broad,
prophylactic prohibition on exclusive contracts to reliance instead on a case-by-case process, including Section
628(b) complaints), 3443-44, ¶ 57 (seeking comment on the costs and benefits of retaining, after a sunset, the
existing process whereby a cable operator or a satellite-delivered, cable-affiliated programmer may seek
Commission approval for an exclusive contract by demonstrating that the arrangement serves the public interest),
3448, ¶ 66 (seeking comment on the costs and benefits of moving from a broad, prophylactic prohibition on
exclusive contracts to reliance instead on a case-by-case process, including non-price discrimination complaints),
3452, ¶ 71 (seeking comment on the costs and benefits of moving from a broad, prophylactic prohibition on
exclusive contracts throughout the nation to reliance instead on a market-by-market assessment); 3460, ¶ 88
(seeking comment generally on the costs and benefits of the alternatives discussed in the NPRM).
177 See supra ¶¶ 31-32.
178 See supra ¶ 24 and Appendices F-G. As discussed above, our decision to decline to extend the exclusive contract
prohibition beyond its sunset date does not impact our analysis in the Comcast/NBCU Order concluding that the
program access merger conditions adopted therein were necessary to curb Comcast’s anticompetitive exclusionary
program access strategies that might result from the transaction. See supra n.12.
179 See supra ¶ 40.
180 See infra ¶ 61.
181 See supra ¶ 25.
182 See supra ¶ 41.
183 See infra ¶¶ 55-56.
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empirical evidence on RSNs.184 In addition, as noted above, the costs of pursuing a complaint can beshared by joining with other MVPDs.185 With these additional measures to ease the burdens of litigating
complaints, we believe that the costs of the case-by-case approach are outweighed by the significant
benefits of our decision to decline to extend the exclusive contract prohibition beyond its sunset date.
e.
Alternatives to Expiration of the Exclusive Contract Prohibition
47.In the NPRM, the Commission sought comment on two ways to relax the exclusive
contract prohibition as alternatives to a complete expiration. For the reasons discussed below, we decline
to adopt these approaches. First, the Commission sought comment on establishing a process whereby a
cable operator or satellite-delivered, cable-affiliated programmer can file a Petition for Sunset seeking to
remove the exclusive contract prohibition on a market-by-market basis based on the extent of competition
in the market.186 Both vertically integrated cable operators and their MVPD competitors oppose this
approach.187 Given the lack of any record support for a market-by-market sunset process, we decline to
adopt it.
48.
Second, the Commission sought comment on whether to retain an exclusive contract
prohibition for satellite-delivered, cable-affiliated RSNs and other satellite-delivered, cable-affiliated
“must have” programming.188 In the 2010 Program Access Order, the Commission rejected suggestions
that it adopt a preemptive prohibition on exclusive contracts involving terrestrially delivered, cable-
affiliated RSNs.189 The Commission explained that, previously in the Adelphia Order, it analyzed the
impact of the withholding of three terrestrially delivered, cable-affiliated RSNs on the market shares of
DBS operators.190 While the Commission found a significant impact on predicted DBS market share in
two cases,191 it found no statistically significant impact in a third case.192 While the Commission found
184 See id.
185 See supra ¶ 41.
186 See NPRM, 27 FCC Rcd at 3449-52, ¶¶ 69-71.
187 See DIRECTV Comments at 35-36; NCTA Comments at 15; OPASTCO/NTCA Comments at 8; TWC
Comments at 17-19; USTelecom Comments at 13-14; Comcast Reply Comments at 8-9; Verizon Reply Comments
at 9.
188 See NPRM, 27 FCC Rcd at 3452-56, ¶¶ 72-80. Vertically integrated cable operators claim, among other things,
that an RSN-only prohibition (i) would not allow for an individual assessment of the unique facts of each case; (ii) is
inappropriate because RSNs are not “must have” programming; and (iii) would violate the First Amendment. See
Comcast Comments at 21-22; MSG Comments at 5, 22-29; NCTA Comments at 15; TWC Comments at 19-21;
Comcast Reply Comments at 10-13; MSG Reply Comments at 12-13. While some MVPDs that compete with
incumbent cable operators urge the Commission to adopt an RSN-only prohibition “at the very least” should it
decline to extend the prohibition in its entirety, others note that the Commission previously rejected proposals to
narrow the prohibition based on the type of programming. Compare OPASTCO/NTCA Comments at 9 n.38;
USTelecom Comments at 8-10; Verizon Comments at 2-3, 6-10; Verizon Reply Comments at 4-9 with CenturyLink
Comments at 18-19; DIRECTV Comments at 36-39; see also 2007 Extension Order, 22 FCC Rcd at 17839-40, ¶ 69
(“[I]n adopting the exclusive contract prohibition in Section 628(c)(2)(D), Congress applied the prohibition to all
cable-affiliated programming. Congress did not distinguish between different types of cable-affiliated
programming. . . . [W]e believe that treating all satellite cable programming and satellite broadcast programming
uniformly for purposes of the exclusive contract prohibition is consistent with Section 628(c)(2)(D) and the
definitions set forth in Sections 628(i)(1) and (3).”); 2002 Extension Order, 17 FCC Rcd at 12156, ¶ 69.
189 See 2010 Program Access Order, 25 FCC Rcd at 750, ¶ 7, 770-71, ¶ 35, and 782-83, ¶ 52.
190 See id. at 770-71, ¶ 35 and 782-83, ¶ 52 (citing Adelphia Order, 21 FCC Rcd at 8271, ¶ 149 and 8271-72, ¶ 151).
191 See id. (citing Adelphia Order, 21 FCC Rcd at 8271, ¶ 149 (concluding that Comcast’s withholding of the
terrestrially delivered Comcast SportsNet Philadelphia RSN from DBS operators caused the percentage of television
households subscribing to DBS in Philadelphia to be 40 percent lower than what it otherwise would have been;
(continued….)
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this evidence sufficient to support a rebuttable presumption of “significant hindrance,”193 it rejected theclaim that the “empirical evidence concerning RSNs is so uniform that it supports a per se rule that an
unfair act involving a terrestrially delivered, cable-affiliated RSN always significantly hinders or prevents
the MVPD from providing satellite cable programming or satellite broadcast programming.”194
49.
Based on the record here, we find no basis to reach a different conclusion for satellite-
delivered, cable-affiliated RSNs.195 We note that, since the 2010 Program Access Order, the Commission
has found that the withholding of two additional terrestrially delivered, cable-affiliated RSNs (MSG HD
and MSG+ HD) “significantly hindered” two MVPDs (Verizon and AT&T).196 Commenters also put
forth surveys and other evidence, including evidence previously submitted in program access complaint
proceedings, to support their claims regarding the uniform nature of RSNs as critical for competition.197
But this additional evidence fails to refute the Commission’s previous findings that withholding of a
cable-affiliated RSN does not always have a significant competitive impact.198 As the Adelphia Order
demonstrates, unique factors at play in individual cases can dictate the extent to which withholding of an
RSN impacts competition, such as whether the teams carried by the RSN are new and without an
established following.199 Moreover, as discussed above, if we were to adopt a preemptive prohibition for
exclusive contracts involving satellite-delivered, cable-affiliated RSNs, the prohibition would impact only
concluding that Cox’s withholding of the terrestrially delivered Cox-4 RSN from DBS operators in San Diego
caused the percentage of television households subscribing to DBS in that city to be 33 percent lower than what it
otherwise would have been)).
192 See id. (citing Adelphia Order, 21 FCC Rcd at 8271, ¶ 149 and 8271-72, ¶ 151 (concluding that withholding of a
terrestrially delivered RSN in Charlotte did not show a statistically significant effect on predicted market share)).
The Commission noted that the RSN in the third case showed the games of a relatively new team “‘that did not yet
have a strong enough following to induce large numbers of subscribers to switch MVPDs.’” See id. at 782-83, ¶ 52
(quoting Adelphia Order, 21 FCC Rcd at 8271, ¶ 149 and 8271-72, ¶ 151).
193 See id. at 782-83, ¶ 52.
194 Id.
195 See NPRM, 27 FCC Rcd at 3453, ¶ 74 (seeking comment on whether there are legal and/or policy reasons why
the Commission may want to establish a case-by-case approach for assessing exclusive contracts involving
terrestrially delivered, cable-affiliated RSNs, but to retain an across-the-board prohibition on exclusive contracts
involving satellite-delivered, cable-affiliated RSNs).
196 See supra n.10; see also AT&T Comments at 17-19; DIRECTV Comments at 10-11; USTelecom Comments at
8-10; Verizon Comments at 2-3; Verizon Reply Comments at 4-6.
197 See AT&T Comments at 13-15 and Attachments 1-6; Verizon Comments at 2, 7-8; Verizon Reply Comments at
4-7.
198 See 2010 Program Access Order, 25 FCC Rcd at 770-71, ¶ 35, and 782-83, ¶ 52; Adelphia Order, 21 FCC Rcd at
8271, ¶ 149 and 8271-72, ¶ 151.
199 See Adelphia Order, 21 FCC Rcd at 8271, ¶ 149 and 8271-72, ¶ 151; MSG Comments at 26 (stating that whether
an exclusive contract for an RSN has the potential to harm competition depends on a wide variety of factors,
including the size of the market, the number of professional sports teams, the number of RSNs in the market, the
volume and type of sports programming carried by the RSN in question, and the performance of the teams carried
by the RSN, but that a “one-size-fits-all blanket ban on RSN exclusivity . . . effectively preempts any assessment of
these factors in determining the competitive impact of any particular exclusive agreement. As a result, any ban on
RSN exclusivity hinders licensing arrangements that may have no adverse competitive effects and could enhance
consumer welfare.”); NCTA Sept. 7, 2012 Ex Parte Letter, Israel Decl. at 12 (¶ 16) (“the situation surrounding any
particular RSN is inherently localized—depending on the content available on the RSN, the preferences of local
viewers, alternative sources of content, etc.—and thus the example of RSNs highlights the need for case-by-case
analysis”).
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18 out of the 56 cable-affiliated RSNs available today.200 The remaining cable-affiliated RSNs are eitherterrestrially delivered (and thus subject to a case-by-case complaint process) or Comcast-controlled (and
thus subject to program access merger conditions that require Comcast to make these networks available
to competitors).201 We find no basis in the record to single out these 18 RSNs for a preemptive
prohibition on exclusive contracts. To be sure, as discussed below, we find, as the Commission found in
the 2010 Program Access Order, that the weight of the existing precedent and categorical evidence
concerning RSNs is sufficient to establish a rebuttable presumption that an exclusive contract involving a
cable-affiliated RSN has the purpose or effect prohibited in Section 628(b) of the Act.202 But, consistent
with our previous holding, we continue to believe that, “[r]ather than adopting a general conclusion about
the effect of these unfair acts, . . . case-by-case consideration of the impact on competition in the video
distribution market is necessary to address whether unfair practices significantly hinder competition in
particular cases.”203
50.
We also decline to retain a preemptive prohibition for any other categories of satellite-
delivered, cable-affiliated programming.204 Several commenters offer examples of networks and
programming that they consider to be “must have” programming.205 These commenters, however, fail to
provide empirical data supporting their positions, nor do they offer a rational and workable definition of
such programming that can be applied objectively.206 Accordingly, we conclude that there is insufficient
evidence in the record to support retention of a preemptive prohibition for any categories of satellite-
delivered, cable-affiliated programming.207
2.
Case-by-Case Complaint Process
51.For the reasons discussed above, rather than continue the current approach of a
preemptive prohibition on exclusive contracts between cable operators and satellite-delivered, cable-
200 See supra ¶ 28.
201 As discussed above, our decision to decline to extend the exclusive contract prohibition beyond its sunset date
does not impact our analysis in the Comcast/NBCU Order concluding that the program access merger conditions
adopted therein were necessary to curb Comcast’s anticompetitive exclusionary program access strategies that might
result from the transaction. See supra n.12.
202 See 2010 Program Access Order, 25 FCC Rcd at 782-83, ¶ 52; see also infra ¶ 55.
203 2010 Program Access Order, 25 FCC Rcd at 770-71, ¶ 35.
204 See NPRM, 27 FCC Rcd at 3454-55, ¶ 76 (seeking comment on whether there are any other categories of
satellite-delivered, cable-affiliated programming besides RSNs that can be deemed “must have” and for which the
Commission should retain the exclusivity prohibition).
205 See AT&T Comments at 20 (arguing that the Commission should consider not only “must have” networks, but
also “must have” programs, such as Pawn Stars and American Pickers on the History Channel and Suits and Burn
Notice on USA Network); CenturyLink Comments at 18 (citing USA Network, Discovery, and the Travel Channel
as examples of “must have” programming); DIRECTV Comments at 37-38, 42 (arguing that national sports
networks have many characteristics in common with regional ones and thus are “must have” programming);
USTelecom Comments at 7 (citing Lifetime, A&E, SyFy, E! Entertainment Television, Bravo, History Channel,
Weather Channel, and USA Network as examples of “must have” programming); see also ACA Oct. 1, 2012 Ex
Parte Letter at 4 (discussing non-cable-affiliated national sports networks).
206 See NPRM, 27 FCC Rcd at 3454-55, ¶ 76 (requesting that commenters provide “a rational and workable
definition of such programming that can be applied objectively” and “reliable, empirical data supporting their
positions, rather than merely labeling such programming as ‘must have’”).
207 This lack of record evidence supporting retention of a preemptive prohibition should not be read to state or imply
that a complainant could not show that withholding of certain programming results in significant hindrance under
Section 628(b) based on the facts presented in a complaint proceeding.
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affiliated programmers, we will consider these exclusive contracts instead on a case-by-case basis inresponse to complaints alleging a violation of Section 628(b). Moreover, additional causes of action
under Section 628 will continue to apply after expiration of the exclusive contract prohibition, including
claims alleging undue influence under Section 628(c)(2)(A)208 and claims alleging discrimination under
Section 628(c)(2)(B).209
a.
Section 628(b) Complaints
(i)Procedures for Challenging Exclusive Contracts Involving
Satellite-Delivered, Cable-Affiliated Programming Pursuant
to Section 628(b)
The Commission in the 2010 Program Access Order adopted a case-by-case complaint
process to address unfair acts involving terrestrially delivered, cable-affiliated programming that allegedly
violate Section 628(b).210 As detailed below, we are extending these rules and policies to Section 628(b)
complaints challenging exclusive contracts involving satellite-delivered, cable-affiliated programming.211
53.
Under the case-by-case process for complaints alleging that an exclusive contract
involving satellite-delivered, cable-affiliated programming violates Section 628(b), the complainant will
have the burden to establish that the exclusive contract at issue is “unfair” based on the facts and
circumstances presented. The Commission has held previously that determining whether challenged
conduct is “unfair” requires “balancing the anticompetitive harms of the challenged conduct against the
procompetitive benefits.”212 In addition, the complainant will have the burden of proving that the
exclusive contract has the “purpose or effect” of “significantly hindering or preventing” the complainant
208 See 47 U.S.C. § 548(c)(2)(A). The Commission has explained that the “concept of undue influence between
affiliated firms is closely linked with discriminatory practices and exclusive contracting” and that the prohibition on
undue influence “can play a supporting role where information is available (such as might come from an internal
‘whistleblower’) that evidences ‘undue influence’ between affiliated firms to initiate or maintain anticompetitive
discriminatory pricing, contracting, or product withholding.” 1993 Program Access Order, 8 FCC Rcd at 3424, ¶
145. The Commission has acknowledged that “such conduct may be difficult for the Commission or complainants
to establish” but “its regulation provides a useful support for direct discrimination and contracting regulation.” Id.
The NPRM sought comment on whether, in the event of the expiration of the exclusive contract prohibition, a cable
operator can “unduly influence” a satellite-delivered, cable-affiliated programmer to enter into an exclusive contract
only if the underlying contract violates Section 628(b) or Section 628(c)(2)(B). See NPRM, 27 FCC Rcd at 3448-49,
¶ 67. Because the record on this issue is not well developed, we decline to address this issue at this time as a
rulemaking matter, but leave open the possibility to consider such claims in the context of an appropriate
adjudicatory matter.
209 See 47 U.S.C. §§ 628(c)(2)(B); see infra ¶¶ 60-62.
210 See 2010 Program Access Order, 25 FCC Rcd at 777-88, ¶¶ 46-61.
211 See NPRM, 27 FCC Rcd at 3439-44, ¶¶ 50-57 (seeking comment on the process for complaints alleging that an
exclusive contract involving satellite-delivered, cable-affiliated programming violates Section 628(b)).
212 See, e.g., Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13160-77, ¶¶ 18-41 (finding that
withholding of the HD versions of the MSG and MSG+ RSNs from Verizon was an “unfair act”), affirmed, Verizon
v. MSG/Cablevision (Commission Order), 26 FCC Rcd at 15852-53, ¶ 8 (“Determining whether challenged conduct is
‘unfair’ requires balancing the anticompetitive harms of the challenged conduct against the procompetitive
benefits.”); AT&T v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13222-40, ¶¶ 19-42 (finding that withholding
of the HD versions of the MSG and MSG+ RSNs from AT&T was an “unfair act”), affirmed, AT&T v.
MSG/Cablevision (Commission Order), 26 FCC Rcd at 15874-75, ¶ 8 (“Determining whether challenged conduct is
‘unfair’ requires balancing the anticompetitive harms of the challenged conduct against the procompetitive
benefits.”), appeal pending sub nom. Cablevision Sys. Corp. et al. v. FCC, No. 11-4780 (2nd Cir.); see also Comcast
Reply Comments at 16-17 (arguing that the Commission cannot presume that exclusive contracts are categorically
“unfair”).
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from providing satellite cable programming or satellite broadcast programming.213 As noted in the 2010Program Access Order, it is not our intent to remove incentives for MVPDs to improve their program
offerings in order to differentiate themselves in the marketplace as long as their efforts to do so do not
have the purpose or effect of significantly hindering or preventing an MVPD from providing satellite
cable programming or satellite broadcast programming.214 In this regard, as previously noted in the 2010
Program Access Order, it is highly unlikely that an unfair act involving local news and local community
or educational programming will have the prescribed purpose or effect under Section 628(b).215 As the
Commission noted, local news and local community or educational programming is readily replicable by
competitive MVPDs and exclusivity has played an important role in the growth and viability of local
cable news networks.216
54.
The Commission has not adopted specific evidentiary requirements with respect to proof
that the defendant’s alleged activities have the “purpose or effect” of “significantly hindering or
preventing” the complainant from providing satellite cable programming or satellite broadcast
programming.217 Rather, the evidence required to satisfy this burden will vary based on the facts and
circumstances of each case and may depend on, among other things, whether the complainant is a new
entrant or an established competitor and whether the programming the complainant seeks to access is new
or existing programming.218 Illustrative examples of evidence that a complainant may provide include:
(i) an appropriately crafted regression analysis that estimates what the complainant’s market share in the
MVPD market would be if it had access to the programming and how that compares to its actual market
share; or (ii) statistically reliable survey data indicating the likelihood that customers would choose not to
subscribe to or not to switch to an MVPD that did not carry the withheld programming.219 We will assess
213 See 47 U.S.C. § 548(b); see also 2010 Program Access Order, 25 FCC Rcd at 781, ¶ 51.
214 See 2010 Program Access Order, 25 FCC Rcd at 781-82, n.200.
215 See id.
216 See id.
217 See id. at 785-86, ¶ 56.
218 See id. Comcast maintains that Section 628(b) cannot be read to mean that every exclusive contract involving
satellite-delivered, cable-affiliated programming would violate the “hinder significantly or prevent” prong of Section
628(b) because the contract would “prevent” an MVPD from providing the particular satellite-delivered
programming subject to the exclusive contract. See Comcast Reply Comments at 17 n.63. We agree. As the
Commission and the D.C. Circuit have explained previously, the “hinder significantly or prevent” prong of Section
628(b) focuses on how the withholding at issue impacts the MVPD’s ability to provide a competing video service,
not particular video programming. See 2010 Program Access Order, 25 FCC Rcd at 774-75, ¶ 39 (“The focus of the
statute is not on the ability of an MVPD to provide a particular terrestrially delivered programming network, but on
the ability of the MVPD to compete in the video distribution market by selling satellite cable and satellite broadcast
programming to subscribers and consumers. . . . [I]n some cases the effect of denying an MVPD the ability to
provide certain terrestrially delivered, cable-affiliated programming may be to significantly hinder the MVPD from
providing video programming in general . . . .”); see also Cablevision II, 649 F.3d at 708 (rejecting claims that
withholding of terrestrially delivered programming does not significantly hinder an MVPD from providing “satellite
cable programming or satellite broadcast programming,” explaining that this argument “wrongly assumes an
MVPD’s lack of commercial attractiveness will never prevent or significantly hinder it from providing satellite
programming”), id. (explaining that when an MVPD is denied access to “programming that customers want and that
competitors are unable to duplicate—like the games of a local team selling broadcast rights to a single sports
network—competitor MVPDs will find themselves at a serious disadvantage when trying to attract customers away
from the incumbent cable company”).
219 See 2010 Program Access Order, 25 FCC Rcd at 785-86, ¶ 56. We recognize that not all potential complainants
will have the resources to perform a regression analysis or market survey and reiterate that these examples are
illustrative only. See id.
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the reliability of any evidence presented, such as the regression analysis, survey data, or other empiricaldata, on a case-by-case basis. The discovery process will enable parties to obtain additional evidence to
assist in making these showings.220
55.
We also establish a rebuttable presumption that an exclusive contract involving a
satellite-delivered, cable-affiliated RSN has the “purpose or effect” of “significantly hindering or
preventing” the complainant from providing satellite cable programming or satellite broadcast
programming, as set forth in Section 628(b).221 The record in this proceeding supports the conclusion that
RSNs are non-replicable and, in many cases, critically important to consumers.222 We note that in the
2010 Program Access Order the Commission adopted a similar rebuttable presumption for terrestrially
delivered, cable-affiliated RSNs, relying on Commission precedent and record evidence that
demonstrated that RSNs are likely to be both non-replicable and highly valued by consumers.223 The
D.C. Circuit upheld the Commission’s decision to establish this rebuttable presumption under both First
Amendment and APA review.224 The same analysis and findings from the 2010 Program Access Order
supporting a rebuttable presumption for terrestrially delivered, cable-affiliated RSNs apply equally to
satellite-delivered, cable-affiliated RSNs. Indeed, commenters in this proceeding have not provided any
evidence or suggested any basis for having a rebuttable presumption of “significant hindrance” for
220 See id.; see also 47 C.F.R. § 76.1003(j).
221 See NPRM, 27 FCC Rcd at 3441-42, ¶ 53 (seeking comment on whether to adopt a rebuttable presumption of
“significant hindrance” under Section 628(b) for exclusive contracts involving satellite-delivered, cable-affiliated
RSNs).
222 Several commenters cite the Commission’s recent decisions in Verizon v. MSG/Cablevision and AT&T v.
MSG/Cablevision as further evidence that RSNs are non-replicable, must have programming. In each of these
decisions, the Commission found that the record contained “additional support for the Commission’s conclusion that
[RSNs] are non-replicable and critically important to consumers and competition.” Verizon v. MSG/Cablevision
(Bureau Order), 26 FCC Rcd at 13181, ¶ 47 (citing, among other things, MSG’s statements from a previous
litigation conceding that close substitutes do not exist for sports content, ratings demonstrating that RSNs are
popular programming, evidence that RSNs receive significantly higher license fees than other types of
programming, thus indicating their value and importance to consumers, and results from a consumer survey
demonstrating that a significant number of consumers in New York and Buffalo watch RSNs), affirmed, Verizon v.
MSG/Cablevision (Commission Order), 26 FCC Rcd at 15852-54, ¶¶ 7-9; see AT&T v. MSG/Cablevision (Bureau
Order), 26 FCC Rcd at 13244-45, ¶ 48 (citing, among other things, MSG’s statements from a previous litigation
conceding that close substitutes do not exist for sports content, and results from a consumer survey demonstrating
that a significant number of consumers in New York watch RSNs), affirmed, AT&T v. MSG/Cablevision
(Commission Order), 26 FCC Rcd at 15874-76, ¶¶ 7-9, appeal pending sub nom. Cablevision Sys. Corp. et al. v. FCC,
No. 11-4780 (2nd Cir.); see also AT&T Comments at 15-20; DIRECTV Comments at 10-11; USTA Comments at 8-
9; Verizon Comments at 7-10. Commenters also put forth surveys and other evidence to support their claims
regarding the importance of RSNs, including evidence previously submitted in program access complaint
proceedings. See AT&T Comments at 13-15 and Attachments 1-6; Verizon Comments at 2, 7-8; Verizon Reply
Comments at 4-7; see also Letter from William M. Wiltshire, Counsel for DIRECTV, LLC, to Marlene H. Dortch,
Secretary, FCC, MB Docket Nos. 12-68, 07-18, 05-192 (August 31, 2012) (attaching Kevin M. Murphy, Economic
Analysis of the Impact on DIRECTV’s Subscribership of Carrying an RSN - Evidence from San Diego (August 31,
2012)).
223 See 2010 Program Access Order, 25 FCC Rcd at 782-83, ¶ 52; see also supra ¶ 48.
224 See Cablevision II, 649 F.3d at 716-18; id. at 717 (“[T]he Commission advanced compelling reasons to believe
that withholding RSN programming is, given its desirability and non-replicability, uniquely likely to significantly
impact the MVPD market.”); id. at 718 (“Given record evidence demonstrating the significant impact of RSN
programming withholding, the Commission’s presumptions represent a narrowly tailored effort to further the
important governmental interest of increasing competition in video programming.”).
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terrestrially delivered, cable-affiliated RSNs, but not for satellite-delivered, cable-affiliated RSNs.225Moreover, real-world evidence of withholding of RSNs, as well as the data in our record showing the
increase of regional clusters, demonstrate that cable-affiliated programmers may still have an incentive to
enter into exclusive contracts for satellite-delivered RSNs in some markets.226 Accordingly, we believe
that the record justifies the establishment of a rebuttable presumption that an exclusive contract involving
a satellite-delivered, cable-affiliated RSN has the purpose or effect set forth in Section 628(b).227
56. For purposes of this rebuttable presumption, we will define the term “RSN” in the same way
the Commission defined that term in the 2010 Program Access Order and in previous merger proceedings
that have adopted program access conditions:228
any non-broadcast video programming service that (1) provides live or same-day
distribution within a limited geographic region of sporting events of a sports team that is
a member of Major League Baseball, the National Basketball Association, the National
Football League, the National Hockey League, NASCAR, NCAA Division I Football,
NCAA Division I Basketball, Liga de Béisbol Profesional de Puerto Rico, Baloncesto
Superior Nacional de Puerto Rico, Liga Mayor de Fútbol Nacional de Puerto Rico, and
the Puerto Rico Islanders of the United Soccer League’s First Division, and (2) in any
year, carries a minimum of either 100 hours of programming that meets the criteria of
225 See NPRM, 27 FCC Rcd at 3441, ¶ 53 (requesting comment on whether there is any basis to have a rebuttable
presumption of “significant hindrance” for terrestrially delivered, cable-affiliated RSNs, but not when these
networks are satellite-delivered); see also DIRECTV Comments at 42 (stating that it would be appropriate to adopt
the same rebuttable presumption for unfair acts involving satellite-delivered, cable-affiliated RSNs that applies with
respect to unfair acts involving terrestrial-delivered, cable-affiliated RSNs because cable’s incentive and ability do
not vary based on whether the programming is delivered by satellite or terrestrial means); see also ITTA Comments
at 6-7. To be sure, some vertically integrated cable operators and cable-affiliated programmers claim that there is no
basis to presume that exclusive contracts for any RSNs significantly hinder MVPDs from providing a competing
video service, noting that certain MVPDs do not carry one or more RSNs in certain markets and that DBS operators’
collective market share in Philadelphia (where they do not carry a Comcast-affiliated RSN) is higher than in some
other markets where DBS operators carry some or all of the applicable RSNs. See Comcast Reply Comments at 12-
13, 17-18; see also Comcast Comments at 21-22; MSG Comments at 5, 22-27; MSG Reply Comments at 12-13.
We find that this evidence fails to refute the existing precedent and evidence concerning the importance of RSNs,
including the rigorous empirical analysis set forth in the Adelphia Order. See supra n.191; see also Cablevision II,
649 F.3d at 716-18; Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13181, ¶ 47 n.219 (“[T]he record
here contains no evidence of the circumstances that led to the MVPDs’ decision to refrain from carrying an RSN.”),
affirmed, Verizon v. MSG/Cablevision (Commission Order), 26 FCC Rcd at 15866, ¶ 25; AT&T v. MSG/Cablevision
(Bureau Order), 26 FCC Rcd at 13261, ¶ 63 n.330 (same), affirmed, AT&T v. MSG/Cablevision (Commission Order),
26 FCC Rcd at 15888, ¶ 25, appeal pending sub nom. Cablevision Sys. Corp. et al. v. FCC, No. 11-4780 (2nd Cir.);
Verizon Reply Comments at 6-7.
226 See supra ¶¶ 18-20.
227 A defendant may overcome this presumption by establishing that the exclusive contract does not have the
purpose or effect of significantly hindering or preventing the MVPD from providing satellite cable programming or
satellite broadcast programming. See 2010 Program Access Order, 25 FCC Rcd at 782-83, ¶ 52. As the
Commission and the D.C. Circuit have explained, “a rebuttable presumption does not shift the burden of proof to
defendants; rather, it requires defendants to come forward with evidence that rebuts or meets the presumption.”
Verizon v. MSG/Cablevision (Commission Order), 26 FCC Rcd at 15863, ¶ 20; see AT&T v. MSG/Cablevision
(Commission Order), 26 FCC Rcd at 15885, ¶ 20; see also Cablevision II, 649 F.3d at 716 (“Reviewing the
Commission’s order, we think it clear that its rebuttable presumptions shift only the burden of production.”).
228 See NPRM, 27 FCC Rcd at 3441, ¶ 53 (proposing to define the term “RSN” in the same way the Commission
defined that term in the 2010 Program Access Order).
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subheading 1, or 10% of the regular season games of at least one sports team that meetsthe criteria of subheading 1.229
A complainant will have the burden of showing that the network at issue satisfies this definition.230
57.
Given consumers’ growing preference for HD programming,231 we will analyze the HD
version of a network separately from the standard definition (“SD”) version of the network for purposes
of determining whether an exclusive contract involving satellite-delivered, cable-affiliated programming
has the purpose or effect set forth in Section 628(b).232 The Commission has recognized that consumers
are increasingly demanding HD programming and do not view the SD version of a particular network to
be an acceptable substitute for the HD version due to the different technical characteristics and sometimes
different content of these versions.233 The D.C. Circuit upheld under both First Amendment and APA
review the Commission’s decision in the 2010 Program Access Order to analyze the HD and SD versions
of a network separately when evaluating Section 628(b) complaints involving terrestrially delivered
programming.234 The same analysis and findings from the 2010 Program Access Order pertaining to the
distinction between HD and SD versions of a network apply here. Thus, in considering a complaint
regarding an exclusive contract involving a satellite-delivered, cable-affiliated HD network, the mere fact
that the complainant offers the SD version of the network to subscribers will not alone be sufficient to
refute a claim under Section 628(b).235 In cases involving an RSN, there will be a rebuttable presumption
that an exclusive contract involving the HD version of the RSN results in “significant hindrance” even if
the complainant offers the SD version of the RSN to subscribers.236
58.
We decline to establish a rebuttable presumption of “significant hindrance” for any
categories of satellite-delivered, cable-affiliated programming other than RSNs.237 Several commenters
229 2010 Program Access Order, 25 FCC Rcd at 783-84, ¶ 53.
230 See id. at 784, ¶ 53.
231 See ITTA Comments at 6 (noting that “while it is important for competing MVPDs to carry both SD and HD
versions of a particular network, HD networks are particularly valuable to subscribers who own HD televisions and
want access to HD programming that will allow them to fully realize the enhanced picture quality and other benefits
associated with such programming.”); see also Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13182-
84, ¶ 48 (noting record evidence providing further support for the Commission’s conclusion regarding the growing
significance of HD RSNs to consumers), affirmed, Verizon v. MSG/Cablevision (Commission Order), 26 FCC Rcd
15849; AT&T v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13245-47, ¶ 49 (same), affirmed, AT&T v.
MSG/Cablevision (Commission Order), 26 FCC Rcd 15871, appeal pending sub nom. Cablevision Sys. Corp. et al. v.
FCC, No. 11-4780 (2nd Cir.); Verizon Reply Comments at 6-7.
232 See NPRM, 27 FCC Rcd at 3442, ¶ 54.
233 See id. at 784-85, ¶ 54-55.
234 See Cablevision II, 649 F.3d at 716-18.
235 See 2010 Program Access Order, 25 FCC Rcd at 785, ¶ 55.
236 See id.
237 See NPRM, 27 FCC Rcd at 3441-42, ¶ 53 (seeking comment on whether there are other types of satellite-
delivered, cable-affiliated programming besides RSNs for which the Commission should establish a rebuttable
presumption). The Commission also sought comment in the NPRM on whether to establish a rebuttable
presumption that, once a complainant succeeds in demonstrating an exclusive contract involving a satellite-
delivered, cable-affiliated programming network violates Section 628(b) or Section 628(c)(2)(B), any other
exclusive contract involving the same network violates Section 628(b) or Section 628(c)(2)(B). See id. at 3443, ¶
56. While we have received a few ex parte submissions on this issue, we do not believe the record on this issue is
sufficiently developed and thus decline to adopt this rebuttable presumption at this time. See, e.g., Letter from Rick
Chessen, Senior Vice President, Law and Regulatory Policy, NCTA, to Marlene H. Dortch, Secretary, FCC, MB
(continued….)
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offer examples of networks and programming that they consider to be “must have” programming.238These commenters, however, fail to provide empirical data supporting their positions, nor do they offer a
rational and workable definition of such programming that can be applied objectively.239 Accordingly,
we conclude that there is insufficient evidence in the record to support adoption of a rebuttable
presumption for any other categories of satellite-delivered, cable-affiliated programming.240
(ii)
45-day Answer Period
59.
We amend our rules to provide for the same 45-day answer period for all complaints
alleging a violation of Section 628(b), regardless of whether the complaint involves satellite-delivered or
terrestrially delivered programming.241 While our current program access procedural rules require a
defendant to a complaint involving satellite-delivered programming to file an answer within 20 days after
service,242 the Commission allows a defendant to a complaint involving terrestrially delivered
programming 45 days after service to file an answer.243 The Commission determined that additional time
is appropriate because, unlike complaints alleging a violation of the prohibitions set forth in Section
628(c), a complaint alleging a violation of Section 628(b) entails additional factual inquiries, including
whether the allegedly “unfair act” at issue has the purpose or effect set forth in Section 628(b).244
Although one commenter expresses concern that a 45-day answer period will lead to delays in resolving
complaints,245 we conclude that the same 45-day answer period should apply in all complaint proceedings
alleging a violation of Section 628(b) because all such complaints will involve the factual issue of
whether the challenged conduct has the purpose or effect set forth in Section 628(b).246 To the extent a
complaint alleges a violation of both Section 628(b) and Section 628(c), the longer (45-day) answer
period will apply.
b.
Section 628(c)(2)(B) Discrimination Complaints
60.Price and non-price discrimination complaints under Section 628(c)(2)(B) of the Act will
also continue to protect MVPDs in their efforts to compete following expiration of the exclusive contract
prohibition.247 With respect to non-price discrimination, the sunset of the exclusive contract prohibition
Docket Nos. 12-68, 07-18, 05-192 (Oct. 3, 2012), at 2-3; Letter from Barbara S. Esbin, Counsel for ACA, to
Marlene H. Dortch, Secretary, FCC, MB Docket Nos. 12-68, 07-18, 05-192 (Sept. 25, 2012), at 9-10.
238 See supra n.205.
239 See NPRM, 27 FCC Rcd at 3442, ¶ 53 (requesting that commenters provide “a rational and workable definition of
such programming that can be applied objectively” and “reliable, empirical data supporting their positions, rather
than merely labeling such programming as ‘must have’”).
240 This lack of record evidence supporting a rebuttable presumption for this programming should not be read to
state or imply that a complainant could not show that withholding of such programming results in significant
hindrance under Section 628(b) based on the facts presented in a complaint proceeding.
241 See NPRM, 27 FCC Rcd at 3466, ¶ 97 (proposing to amend the Commission’s rules to provide for a 45-day
answer period for all complaints alleging a violation of Section 628(b)).
242 See 47 C.F.R. § 76.1003(e).
243 See 47 C.F.R. § 76.1001(b)(2)(i); 2010 Program Access Order, 25 FCC Rcd at 779-80, ¶ 49.
244 See 2010 Program Access Order, 25 FCC Rcd at 779-80, ¶ 49.
245 See OPASTCO/NTCA Comments at 10-11.
246 See Comcast Comments at 14; DIRECTV Comments at 43 (both supporting adoption of a 45-day answer period).
247 See 1993 Program Access Order, 8 FCC Rcd at 3364, ¶ 14 (“[W]e will find price discrimination to have
occurred if the difference in the price charged to competing distributors is not explained by the statute’s permissible
factors. In general terms, these factors involve (1) cost differences at the wholesale level in providing a program
(continued….)
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does not impact the ability of MVPDs to challenge selective refusals to license under Section628(c)(2)(B), which does not contain a sunset provision. In addition, the statute and our precedent
provide that an exclusive “arrangement” (as opposed to an exclusive “contract”) may violate Section
628(c)(2)(B) of the Act.248
61.
As described in the NPRM, a selective refusal to license occurs when a satellite-
delivered, cable-affiliated programmer singles out a particular MVPD (such as a satellite provider or a
small, rural, or new entrant MVPD) for differential treatment by refusing to license its content to the
MVPD while simultaneously licensing its content to other MVPDs competing in the same geographic
area.249 Commission precedent establishes that a selective refusal to license is a violation of the
discrimination provision in Section 628(c)(2)(B), unless the programmer can establish a “legitimate
business reason” for the conduct.250 Thus, if a satellite-delivered, cable-affiliated programmer
discriminates against an MVPD in this manner, the expiration of the exclusive contract prohibition does
not limit the existing right of an MVPD to file a complaint challenging the selective refusal to license as a
form of non-price discrimination in violation of Section 628(c)(2)(B).251
service to different distributors; (2) volume differences; (3) differences in creditworthiness, financial stability, or
character; and (4) differences in the way the service is offered.”).
248 See NPRM, 27 FCC Rcd at 3444, ¶ 59 (seeking comment on whether to interpret Section 628(c)(2)(B) to allow
challenges to exclusive arrangements as unreasonable refusals to license). The Commission also sought comment in
the NPRM on whether an exclusive contract can be challenged post-sunset as an unreasonable refusal to license in
violation of Section 628(c)(2)(B). See NPRM, 27 FCC Rcd at 3444-47, ¶¶ 60-63. The record on this issue,
however, is not well developed. Accordingly, we defer consideration of this issue. We will instead assess this issue
based on the facts presented in an individual adjudication.
249 See NPRM, 27 FCC Rcd at 3447-48, ¶ 64. As the Commission explained in the 2007 Extension Order, “a
vertically integrated programmer that withholds programming from a recent entrant with a minimal subscriber base
but chooses to offer the programming to all other competitive MVPDs in the market could be found in violation of
the program access rules based on an unreasonable refusal to sell.” 2007 Extension Order, 22 FCC Rcd at 17832-
33, ¶ 60 n.309; see also id. at 17832-33, ¶ 60 (“[A] vertically integrated programmer that withholds programming
from one competitive MVPD in a market would generally need to withhold the programming from all other
competitive MVPDs in the market, thereby increasing the foregone revenues resulting from a withholding
strategy.”); ACA Reply Comments at 21 (“[I]t is possible that, in some cases, a cable-affiliated programmer might
find it profitable to withhold programming from a small overbuilder operating within its affiliated cable operator’s
footprint, even if it would not find it profitable to withhold the same programming from the four large national
MVPDs who typically compete against cable (DirecTV, Dish, AT&T, and Verizon). In such a case, the
discrimination prohibition would continue to provide the small overbuilder with some protection even if the
exclusive contract prohibition is allowed to sunset.”).
250 See 1993 Program Access Order, 8 FCC Rcd at 3364, ¶ 14 (“The statute’s prohibition against discrimination also
encompasses non-price discrimination, which we believe could occur through ‘unreasonable refusals to sell’
programming, including instances where a vendor refuses to initiate negotiations, or to offer particular terms, to an
individual distributor, or to a class of distributors, when such programming or terms are offered to competing
distributors.”); id. at 3412-13, ¶ 116 (“We believe that the Commission should distinguish ‘unreasonable’ refusals to
sell from certain legitimate reasons that could prevent a contract between a vendor and a particular distributor,
including (i) the possibility of parties reaching an impasse on particular terms, (ii) the distributor’s history of
defaulting on other programming contracts, or (iii) the vendor’s preference not to sell a program package in a
particular area for reasons unrelated to an existing exclusive arrangement or a specific distributor.”); see also Bell
Atlantic Video Servs. Co. v. Rainbow Programming Holdings Inc. and Cablevision Sys. Corp., Memorandum
Opinion and Order, 12 FCC Rcd 9892, 9899, ¶ 18 (CSB 1997) (finding that defendant cable-affiliated programmer
had engaged in impermissible non-price discrimination).
251 Complaints alleging a violation of Section 628(c)(2)(B) do not require a showing of harm to the complainant.
See 1993 Program Access Order, 8 FCC Rcd at 3377-78, ¶¶ 47-49 (“[W]e believe that if behavior meets the
definitions of the activities proscribed in [Section 628(c)], such practices are implicitly harmful. . . . In each case, a
(continued….)
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62.As described in the NPRM, an exclusive “arrangement” exists when a satellite-delivered,
cable-affiliated programmer unilaterally refuses to license its programming to all MVPDs competing in a
geographic area except for one (such as its affiliated cable operator), without any exclusive contract with
the MVPD.252 While the expiration of the exclusive contract prohibition in Section 628(c)(2)(D) will
generally permit “exclusive contracts” between cable operators and satellite-delivered, cable-affiliated
programmers,253 it does not permit the unilateral action of the programmer described here, unless the
programmer can establish a “legitimate business reason” for the conduct. Accordingly, the expiration of
the exclusive contract prohibition does not limit the existing right of an MVPD to challenge the unilateral
action of a satellite-delivered, cable-affiliated programmer to refuse to license its programming to all
MVPDs in a market except for one as a form of non-price discrimination in violation of Section
628(c)(2)(B).254
c.
Deadline for Media Bureau Action on Complaints Alleging a Denial
of Programming
We adopt a six-month deadline (calculated from the date of filing of the complaint) for
the Media Bureau to act on a complaint alleging a denial of programming. This deadline will apply
regardless of whether the programming subject to the exclusive contract is terrestrially delivered or
satellite-delivered. As noted above, some commenters claim that a case-by-case complaint process is
burdensome and time-consuming.255 We believe that codifying a specific deadline in our rules for the
Media Bureau to act on a complaint alleging a denial of programming will help to resolve disputes
quickly and efficiently, provide certainty to all parties to the complaint, and fulfill our statutory mandate
to “provide for expedited review” of program access complaints.256
64.
A complainant alleging a denial of programming may bring a claim pursuant to Section
628(b) or Section 628(c) or both. For complaints brought pursuant to Section 628(b), an initial 60-day
pleading cycle applies.257 For complaints brought pursuant to Section 628(c), an initial 35-day pleading
legislative determination was made that there was sufficient potential for harm that the specified unfair practices
should be prohibited. Therefore, we will not impose a threshold burden of demonstrating some form of
anticompetitive harm on a complainant alleging a violation of Section 628(c).”) (citations omitted); see also 1994
Program Access Order, 10 FCC Rcd at 1930, ¶ 62 (“We affirm our prior determination that there is no requirement
to show harm in a complaint alleging violations of conduct prohibited under Section 628(c). Instead, Congress
presumed that the conduct enumerated in Section 628(c) injured competition.”).
252 See NPRM, 27 FCC Rcd at 3444, ¶ 59.
253 Section 628(c)(2)(D) of the Act prohibits “exclusive contracts . . . between a cable operator and a satellite cable
programming vendor in which a cable operator has an attributable interest.” 47 U.S.C. § 548(c)(2)(D). This
language presumes that an agreement exists between the cable operator and the satellite-delivered, cable-affiliated
programmer that would provide the cable operator with exclusivity.
254 The scenario presented in paragraph 62 assumes that a satellite-delivered, cable-affiliated programmer licenses its
programming to one MVPD in a geographic area, to the exclusion of all other MVPDs competing in that geographic
area. Conversely, as discussed above, a selective refusal to license assumes that a satellite-delivered, cable-affiliated
programmer licenses its programming to more than one MVPD competing in a geographic area, but refuses to
license its programming to one or more other MVPDs competing in the same geographic area. See supra ¶ 61. In
either scenario, an aggrieved MVPD can challenge this conduct as a form of non-price discrimination in violation of
Section 628(c)(2)(B).
255 See supra ¶ 41.
256 See 47 U.S.C. § 548(f)(1).
257 See supra ¶ 59 (establishing a 45-day answer period for a complaint alleging a violation of Section 628(b)); infra
Appendix C (adopting amendment to 47 C.F.R. § 76.1003(e)(1) to provide for a 45-day answer period for a
complaint alleging a violation of Section 628(b)); 47 C.F.R. § 76.1003(f) (providing for a 15-day reply period).
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cycle applies.258 After the close of the pleading cycle, the parties may elect to engage in discovery andthen file post-discovery pleadings.259 Although the length of the discovery process will necessarily vary
on a case-by-case basis, given our experience in other complaint proceedings, we expect that parties will
agree on the scope of discovery and complete discovery and post-discovery briefing within approximately
60 days.260 When combined with the initial 60-day pleading cycle (in a Section 628(b) complaint) or 35-
day pleading cycle (in a Section 628(c) complaint), this would provide the Media Bureau with the
complete record on which to base its decision approximately four months (in a Section 628(b) complaint)
or three months (in a Section 628(c) complaint) after the filing of the complaint. Thus, based on these
assumptions, the Media Bureau would have approximately two months (in a Section 628(b) denial of
programming complaint) or three months (in a Section 628(c) denial of programming complaint) to reach
a decision once the record closes. We believe this timeframe is sufficient to allow for the Media Bureau
to review the record and draft and release a decision while also providing for the “expedited review”
required by Congress and ensuring fairness to all parties.261
d.
Petitions for Exclusivity
65.We retain our exclusivity petition process,262 whereby a cable operator or satellite-
delivered, cable-affiliated programmer may file a Petition for Exclusivity seeking a Commission ruling
that an exclusive contract involving satellite-delivered, cable-affiliated programming serves the public
interest.263 To be sure, post-sunset, there is no requirement for a cable operator or a satellite-delivered,
cable-affiliated programmer to seek prior approval for an exclusive contract. However, should a cable
operator or satellite-delivered, cable-affiliated programmer elect to pursue a Petition for Exclusivity grant
of such a petition will immunize the contract from potential complaints alleging a violation of Section
628(c)(2)(B), as required by the terms of Section 628(c)(2)(B)(iv).264
258 See 47 C.F.R. § 76.1003(e)(1) (providing for a 20-day answer period); 47 C.F.R. § 76.1003(f) (providing for a
15-day reply period). As stated above, to the extent a complaint alleges a violation of both Section 628(b) and
Section 628(c), the longer (45-day) answer period will apply. See supra ¶ 59.
259 See 47 C.F.R. § 76.1003(j). In light of the expedited timeframe for the Media Bureau’s decision adopted herein,
we emphasize that complainants should not raise new matters in a reply. See 47 C.F.R. § 76.1003(f).
260 See Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13152-53, ¶ 9.
261 We will allow the Media Bureau to extend these deadlines under exceptional circumstances, such as where the
parties jointly agree to toll the deadline.
262 See NPRM, 27 FCC Rcd at 3443-44, ¶ 57 (seeking comment on whether there would be any benefit to retaining
post-sunset the existing process whereby a cable operator or a satellite-delivered, cable-affiliated programmer may
file a Petition for Exclusivity seeking Commission approval for an exclusive contract involving satellite-delivered,
cable-affiliated programming by demonstrating that the arrangement serves the public interest based on the factors
set forth in Section 628(c)(4) of the Act and Section 76.1002(c)(4) of the Commission’s rules).
263 See 47 U.S.C. § 548(c)(2)(D), (c)(4); see also 47 C.F.R. § 76.1002(c)(4), (c)(5); supra n.21 (listing the factors the
Commission is required to consider in determining whether an exclusive contract serves the public interest).
264 Section 628(c)(2)(B)(iv) provides that it is not a violation of Section 628(c)(2)(B) for a satellite-delivered, cable-
affiliated programmer to “enter [] into an exclusive contract that is permitted under [Section 628(c)(2)(D)].” 47
U.S.C. § 548(c)(2)(B)(iv). The Commission has previously interpreted this language to pertain to only those
exclusive contracts deemed to serve the public interest in response to a Petition for Exclusivity based on the factors
set forth in Section 628(c)(4). See 47 U.S.C. § 548(c)(2)(D) (prohibiting specified exclusive contracts “unless the
Commission determines (in accordance with [Section 628(c)(4)]) that such contract is in the public interest”);
Implementation of Section 302 of the Telecommunications Act of 1996, Open Video Systems, Second Report and
Order, 11 FCC Rcd 18223, 18319, ¶ 185 n.428 (1996) (“We interpret this provision as providing a safe harbor from
challenge under Section 628(c)(2)(B)’s discrimination prohibition to exclusive contracts that the Commission has
determined to be in the public interest under Section 628(c)(2)(D).”) (“1996 OVS Order”).
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e.First Amendment
66.We conclude that addressing complaints challenging exclusive contracts for satellite-
delivered, cable-affiliated programming on a case-by-case basis comports with the First Amendment.265
As explained below, the case-by-case process we adopt for exclusive contracts involving satellite-
delivered, cable-affiliated programming satisfies intermediate scrutiny. 266
67.
Although we conclude herein that changes in the video programming market warrant the
expiration of the broad, prophylactic exclusive contract prohibition, regulation of exclusive contracts
involving satellite-delivered, cable-affiliated programming on a case-by-case basis is still necessary to
preserve and promote competition and diversity in the video distribution market. 267 Cable operators
continue to control 57.4 percent of MVPD subscribers nationwide268 and have an overwhelming share of
subscribers in many regional markets, in the 80 percent range in some cases.269 Moreover, there is
evidence that cable prices have risen in excess of inflation.270 In addition, as discussed above, the record
indicates that vertically integrated cable operators may still have an incentive and ability to enter into
exclusive contracts for satellite-delivered, cable-affiliated programming in some cases, and there may be
instances where this programming is necessary for competition and has no good substitutes.271 In
rejecting a First Amendment challenge to the case-by-case approach adopted by the Commission for
considering unfair acts involving terrestrially delivered, cable-affiliated programming, the D.C Circuit in
Cablevision II stated that “[t]he Commission has no obligation to establish that vertically integrated cable
265 See NPRM, 27 FCC Rcd at 3459, ¶¶ 86-87 (seeking comment on the First Amendment implications of the
alternatives discussed in the NPRM).
266 Time Warner Entertainment Co. L.P. v. FCC, 93 F.3d 957, 978 (D.C. Cir. 1996) (“Time Warner”) (holding that
intermediate scrutiny applies to the program access rules) (quoting Turner Broadcasting System, Inc. v. FCC, 512
U.S. 622, 662 (1994) (“Turner”) (quoting United States v. O'Brien, 391 U.S. 367, 377 (1968))).
267 Id. at 978 (finding that the governmental interest Congress intended to serve in enacting the program access
provisions was “the promotion of fair competition in the video marketplace” and that this interest was substantial);
id. (noting Congress’ conclusion that “the benefits of these provisions — the increased speech that would result
from fairer competition in the video programming marketplace — outweighed the disadvantages [resulting in] the
possibility of reduced economic incentives to develop new programming). Furthermore, one of Congress’ express
findings in enacting the 1992 Cable Act was that “[t]here is a substantial governmental and First Amendment
interest in promoting a diversity of views provided through multiple technology media.” 1992 Cable Act, § 2(a)(6).
268 See supra ¶ 17.
269 See id.; see also NPRM, 27 FCC Rcd at 3435, ¶ 41 (citing data from Nielsen Media Research and concluding
that, “[o]n a regional basis, the market share held by cable operators in DMAs varies considerably, from a high in
the 80 percent range to a low in the 20 percent range. In some major markets, such as New York, Philadelphia, and
Boston, the share of MVPD subscribers attributable to cable operators far exceeds the national cable market share of
67 percent deemed significant in the 2007 Extension Order.”); Comcast/NBCU Order, 26 FCC Rcd at 4284-85, ¶
116 n.275 (“Comcast has over 60 percent of MVPD subscribers in the third (Chicago, 62 percent) and fourth
(Philadelphia, 67 percent) largest MVPD markets.”); DIRECTV Comments at 18 (noting that regional concentration
in many major metropolitan areas — including New York, Boston, Philadelphia, and Washington, DC — remains
much higher than national concentration, with market share in the 80 percent range in some cases); DISH Comments
at 4 (noting that cable controls as much as 83 percent of the market in Philadelphia, 77 percent of the market in
Chicago, and 88.5 percent of the market in New York).
270 See Implementation of Section 3 of the Cable Television Consumer Protection and Competition Act of 1992,
Statistical Report on Average Rates for Basic Service, Cable Programming Service, and Equipment, MM Docket
No. 92-266, Report on Cable Industry Prices, DA 12-1322 (MB 2012); DIRECTV Reply Comments at 16 n.59.
271 See supra ¶¶ 31-32; see also supra ¶ 55 (noting evidence that RSNs are non-replicable and, in many cases,
critically important for competition).
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companies retain a stranglehold on competition nationally or that all withholding of terrestrially deliveredprogramming negatively affects competition.”272 Rather, the Commission “need only show that vertically
integrated cable operators remain dominant in some video distribution markets, that the withholding of
highly desirable terrestrially delivered cable programming, like RSNs, inhibits competition in those
markets, and that providing other MVPDs access to such programming will ‘promot[e] . . . fair
competition in the video marketplace.’”273 Given the clear evidence in the record that cable operators
remain dominant in some regional markets and in some cases may enter into exclusive contracts for
satellite-delivered, cable-affiliated programming that is necessary for competition and has no good
substitutes, we find that the case-by-case approach adopted in this Order serves an important
governmental interest.
68.
Our decision to address exclusive contracts involving satellite-delivered, cable-affiliated
programming on a case-by-case basis is not based on programming content but rather is intended to
address the impact on competition in the video distribution market. 274 Because the regulations we adopt
herein respond to concerns about competition, not content, they are content-neutral and unrelated to the
suppression of free speech. Similarly, our decision to adopt a rebuttable presumption that an exclusive
contract involving a satellite-delivered, cable-affiliated RSN has the prohibited purpose or effect set forth
in Section 628(b) is based not on content but on the existing precedent and record evidence before us
regarding the importance of RSNs for competition.275 As the D.C. Circuit explained in upholding a
similar rebuttable presumption for terrestrially delivered, cable-affiliated RSNs, the “clear and undisputed
evidence shows that the Commission established presumptions for RSN programming due to that
programming’s economic characteristics, not to its communicative impact.”276
69.
Finally, we conclude that any incidental restriction on speech which may result from our
decision to adopt a case-by-case process to address exclusive contracts involving satellite-delivered,
cable-affiliated programming “is no greater than is essential to the furtherance” of Congress’ interest in
promoting competition in the video distribution market. The court in Cablevision II explained that, “[b]y
imposing liability only when complainants demonstrate that a company’s unfair act has the ‘purpose or
effect’ of ‘hinder[ing] significantly or . . . prevent[ing] the provision of satellite programming, . . . the
Commission’s terrestrial programming rules specifically target activities where the governmental interest
is greatest.”277 Similarly, the tailored case-by-case process for addressing exclusive contracts involving
satellite-delivered, cable-affiliated programming targets activities where the governmental interest is
greatest by limiting liability to cases where a complainant demonstrates that an exclusive contract is an
“unfair act” that has the “purpose or effect” of “significantly hindering or preventing” the provision of
272 Cablevision II, 649 F.3d at 712. The court further found that “[a]lthough it is true that competition in the MVPD
industry has generally increased even absent rules restricting terrestrial withholding, nothing prevents the
Commission from addressing any remaining barriers to effective competition with appropriately tailored remedies.”
Id.
273 Id. (quoting Time Warner, 93 F.3d at 978).
274 See Time Warner, 93 F.3d at 978 (holding that the governmental objective served by the program access
provisions was unrelated to the suppression of free expression); id. (“[T]he vertically integrated programming
provisions apply to only a limited number of companies for a perfectly legitimate reason: the antitrust concerns
underlying the statute arise precisely because the number of vertically integrated companies is small. The vertically
integrated programmer provisions are thus not ‘structured in a manner that raise[s] suspicions that their objective
was, in fact, the suppression of certain ideas.”’ (quoting Turner, 512 U.S. at 660)).
275 See supra ¶ 55.
276 Cablevision II, 649 F.3d at 718.
277 Id. at 711-12 (quoting 47 U.S.C. § 548(b)).
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satellite programming in violation of Section 628(b).278 Moreover, with respect to the rebuttablepresumption for satellite-delivered, cable-affiliated RSNs adopted herein, the D.C. Circuit has explained
regarding a similar rebuttable presumption for terrestrially delivered, cable-affiliated RSNs that “[g]iven
record evidence demonstrating the significant impact of RSN programming withholding, the
Commission’s presumptions represent a narrowly tailored effort to further the important governmental
interest of increasing competition in video programming.”279
C.
Subdistribution Agreements
70.Consistent with our decision to decline to extend the exclusive contract prohibition
beyond its sunset date, we eliminate the restrictions on exclusive subdistribution agreements in served
areas between cable operators and satellite-delivered, cable-affiliated programmers.280 The Commission’s
rules define a subdistribution agreement as “an arrangement by which a local cable operator is given the
right by a satellite cable programming vendor or a satellite broadcast programming vendor to distribute
the vendor’s programming to competing multichannel video programming distributors.”281 Based on the
exclusive contract prohibition, the Commission adopted certain restrictions on exclusive subdistribution
agreements in the 1993 Program Access Order to “address any incentives for a subdistributor to refuse to
sell to a competing MVPD that may be inherent in such rights” and to ensure “appropriate safeguards to
limit the potential for anticompetitive behavior.”282 Because we have concluded that the exclusive
contract prohibition in served areas is no longer necessary to preserve and protect competition and
278 Some vertically integrated cable operators suggest that the program access rules are underinclusive because they
apply to cable-affiliated programmers but not other MVPD-affiliated or unaffiliated programmers. See TWC
Comments at 16-17; NCTA Reply Comments at 3; TWC Reply Comments at 3-4. As an initial matter, we note that
the issue of whether to extend certain program access rules to programmers affiliated with non-cable MVPDs is
pending before the Commission. See Review of the Commission’s Program Access Rules and Examination of
Programming Tying Arrangements, MB Docket No. 07-198, Notice of Proposed Rulemaking, 22 FCC Rcd 17791,
17861, ¶ 118 (2007). With respect to unaffiliated programmers, the Commission in the 2007 Extension Order found
no record evidence to conclude that exclusive arrangements involving unaffiliated programmers have harmed
competition in the video distribution market, and commenters offer no evidence in the record of this proceeding that
would cause us to revisit this conclusion. See 2007 Extension Order, 22 FCC Rcd at 17843, ¶ 77. In any event, the
D.C. Circuit in Cablevision II rejected claims that the program access rules were underinclusive, explaining that
these rules “focus on vertically integrated cable companies due to their ‘‘special characteristics’’ and their unique
ability to impact competition.” Cablevision II, 649 F.3d at 713 (citing Time Warner, 93 F.3d at 978 (quoting Turner
Broad. Sys., 512 U.S. at 660–61, 114 S.Ct. 2445)). Moreover, the court explained that “[w]ere the Commission to
persist in regulating only the conduct of cable operators in the face of evidence that exclusive dealing arrangements
involving other MVPDs have similar negative impacts on competition, then our analysis would necessarily change.
But nothing in the present record suggests such unjustified discrimination.” Id. The same conclusion applies based
on the record in this proceeding.
279 Cablevision II, 649 F.3d at 718.
280 See NPRM, 27 FCC Rcd at 3460-61, ¶ 89 (proposing to eliminate the restrictions on exclusive subdistribution
agreements in served areas if the exclusive contract prohibition expires). No commenter addressed this proposal.
281 47 C.F.R. § 76.1000(k).
282 1993 Program Access Order, 8 FCC Rcd at 3387, ¶ 68. These restrictions prohibited a cable operator engaged in
subdistribution from (i) requiring a competing MVPD to purchase additional or unrelated programming as a
condition of such subdistribution; (ii) requiring a competing MVPD to provide access to private property in
exchange for access to programming; and (iii) charging a competing MVPD more for programming than the satellite
cable programming vendor or satellite broadcast programming vendor itself would be permitted to charge. Id. at
3387, ¶ 69. These restrictions also required a cable operator engaged in subdistribution to respond to a request for
access to such programming by a competing MVPD within fifteen (15) days of the request and, if the request is
denied, to permit the competing MVPD to negotiate directly with the satellite cable programming vendor or satellite
broadcast programming vendor. Id.
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diversity in the video distribution market, we conclude that the restrictions on exclusive subdistributionagreements in served areas are likewise no longer necessary and we accordingly eliminate them. In
addition, as proposed in the NPRM, we conform Section 76.1002(c)(3) as it pertains to exclusive
subdistribution agreements in unserved areas to the amendments previously adopted in the 1994 Program
Access Order.283
D.
Common Carriers and Open Video Systems
71.The Commission’s rules contain provisions pertaining to exclusive contracts involving
common carriers or OVS and their affiliated programmers in served areas that mirror the rules applicable
to exclusive contracts involving cable operators and their affiliated programmers in served areas.284 We
conclude that the amendments adopted herein to the rules pertaining to exclusive contracts between cable
operators and satellite-delivered, cable-affiliated programmers in served areas will apply equally to
common carriers and OVS.285 Thus, with respect to common carriers, the prohibition on exclusive
contracts in served areas between a satellite-delivered, common carrier-affiliated programmer and a
common carrier or its affiliate that provides video programming by any means directly to a subscriber will
expire.286 Similarly, the exclusive contract prohibition in served areas will expire as to exclusive
contracts (i) between a satellite-delivered, OVS-affiliated programmer and an OVS or its affiliate that
provides video programming on its OVS; 287 and (ii) between a satellite-delivered, cable-affiliated
programmer and an OVS video programming provider in which a cable operator has an attributable
interest.288 Instead, we will rely on the protections provided by the case-by-case complaint process
described above.289 We also conform the rules pertaining to exclusive subdistribution agreements
involving common carriers and OVS to the rules adopted herein for cable operators by eliminating the
restrictions on such agreements in served areas.290 In addition, as proposed in the NPRM, we conform
283 As explained in the NPRM, certain amendments to Section 76.1002(c)(3) pertaining to exclusive subdistribution
agreements that were adopted in the 1994 Program Access Order and subsequently published in the Federal
Register are not reflected in the Code of Federal Regulations. See NPRM, 27 FCC Rcd at 3460-61, ¶ 89 n.298;
compare 1994 Program Access Order, 10 FCC Rcd at 1955, Appendix A (showing adopted amendments to Section
76.1002(c)(3)) and Cable Television Act of 1992—Program Distribution and Carriage Agreements, 59 FR 66255
(Dec. 23, 1994) (publishing adopted amendments to Section 76.1002(c)(3) in the Federal Register) with 47 C.F.R. §
76.1002(c)(3).
284 See 47 C.F.R. § 76.1004; 47 C.F.R. § 76.1507(a)-(b).
285 See NPRM, 27 FCC Rcd at 3461-62, ¶ 90 (proposing that any amendments made to the rules pertaining to
exclusive contracts between cable operators and satellite-delivered, cable-affiliated programmers in served areas will
apply equally to the rules pertaining to common carriers and OVS). No commenter addressed this proposal.
286 See 47 U.S.C. § 548(j) (providing that “[a]ny provision that applies to a cable operator under this section shall
apply to a common carrier or its affiliate that provides video programming by any means directly to subscribers”);
47 C.F.R. § 76.1004.
287 See 47 U.S.C. § 573(c)(1)(A) (providing that “[a]ny provision that applies to a cable operator under [Section 628]
of this title shall apply . . . to any operator of an open video system”); 47 C.F.R. § 76.1507(a)(2), (a)(3)(ii); 1996
OVS Order, 11 FCC Rcd at 18315-18, ¶¶ 175-180.
288 See 47 U.S.C. § 573(c)(1)(A) (providing that “[a]ny provision that applies to a cable operator under [Section 628]
of this title shall apply . . . to any operator of an open video system”); 47 C.F.R. § 76.1507(b)(2); 1996 OVS Order,
11 FCC Rcd at 18317-24, ¶¶ 181-194; Implementation of Section 302 of the Telecommunications Act of 1996, Open
Video Systems, Third Report and Order and Second Order on Reconsideration, 11 FCC Rcd 20227, 20299-302, ¶¶
168-174 (1996).
289 See supra ¶¶ 51-64.
290 See supra ¶ 70; NPRM, 27 FCC Rcd at 3461-62, ¶ 90.
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Section 76.1507 as it pertains to exclusive subdistribution agreements involving OVS in unserved areas tothe amendments previously adopted in the 1994 Program Access Order.291
E.
Liberty Media Order
Merger Conditions
72.We modify the exclusivity conditions adopted in the Liberty Media Order,292 which
prohibit certain programmers affiliated with Liberty Media and DIRECTV from entering into exclusive
contracts.293 DIRECTV, the only commenter to address this issue, states that if the Commission declines
to extend the exclusive contract prohibition beyond its sunset date, conforming modifications to the
exclusivity conditions in the Liberty Media Order would be appropriate.294 We agree. The merger
conditions adopted in the Liberty Media Order provide that “if the program access rules are modified
these commitments shall be modified, as the Commission deems appropriate, to conform to any revised
rules adopted by the Commission.”295 Consistent with our decision not to extend the exclusive contract
prohibition beyond its sunset date, we modify the exclusivity conditions in the Liberty Media Order to
provide that exclusive contracts will not be subject to a preemptive prohibition. No commenter opposed
this proposal as set forth in the NPRM.296 Because our rules will allow an exclusive contract involving
cable-affiliated programming to be challenged on a case-by-case basis post-sunset, however, we further
modify these conditions to provide that an exclusive contract involving programming covered by these
conditions may be challenged as violating Section 628(b) of the Act and Section 76.1001(a) of the
Commission’s Rules.297 Specifically, we modify Conditions III.1 and III.2 in the Liberty Media Order to
state as follows:
291 As explained in the NPRM, the Commission’s rules pertaining to exclusive subdistribution agreements involving
OVS were adopted in 1996. See NPRM, 27 FCC Rcd at 3461-62, ¶ 90 n.303; 1996 OVS Order, 11 FCC Rcd at
18372-74, Appendix A. These rules, however, do not reflect amendments the Commission made to its rules
pertaining to exclusive subdistribution agreements involving cable operators adopted in the 1994 Program Access
Order. See 1994 Program Access Order, 10 FCC Rcd at 1955, Appendix A (showing adopted amendments to
Section 76.1002(c)(3)).
292 Applications for Consent to the Assignment and/or Transfer of Control of Licenses, News Corporation. and The
DIRECTV Group, Inc., Transferors, to Liberty Media Corporation., Transferee, Memorandum Opinion and Order,
23 FCC Rcd 3265, 3303, ¶ 83 and 3340-41, Appendix B, § III (2008) (“Liberty Media Order”).
293 See NPRM, 27 FCC Rcd at 3463-65, ¶¶ 94-95 (seeking comment on the impact of an expiration of the exclusive
contract prohibition on merger conditions adopted in the Liberty Media Order).
294 DIRECTV Comments at 49. The Commission also sought comment on the impact of an expiration of the
exclusive contract prohibition on merger conditions applicable to TWC adopted in the Adelphia Order. See NPRM,
27 FCC Rcd at 3462-63, ¶¶ 92-93. These conditions, however, expired in July 2012, after release of the NPRM and
before adoption of this Order.
295 Liberty Media Order, 23 FCC Rcd at 3341, Appendix B, § III.6. In contrast to the Liberty Media Order, there is
no provision in the Comcast/NBCU Order requiring the conditions adopted therein to be modified to conform to
changes the Commission makes to the program access rules. See Comcast/NBCU Order, 26 FCC Rcd at 4381,
Appendix A, Condition XX (stating that the conditions will remain in effect for seven years, provided that the
Commission will consider a petition from Comcast/NBCU for modification of a condition if they can demonstrate
that there has been a material change in circumstances, or that the condition has proven unduly burdensome, such
that the Condition is no longer necessary in the public interest). Accordingly, the conditions adopted in the
Comcast/NBCU Order will not be affected by the rule changes adopted in this proceeding.
296 See NPRM, 27 FCC Rcd at 3463-65, ¶¶ 94-95.
297As discussed above, we defer consideration of whether an exclusive contract can be challenged post-sunset as an
unreasonable refusal to license in violation of Section 628(c)(2)(B). See supra n.248. We will instead assess this
issue based on the facts presented in an individual adjudication. We also note that “Liberty Media RSNs,” as
defined in the Liberty Media Order, will continue to be subject to the arbitration condition set forth in the Liberty
Media Order until February 27, 2014, unless the arbitration condition is modified earlier in response to a petition.
(continued….)
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Condition III.1: Liberty Media shall continue to make its existing or future national and regionalprogramming services available to all MVPDs on nondiscriminatory terms and conditions.
Notwithstanding the foregoing, Liberty Media may enter into an exclusive contract for any of
these services with any MVPD, provided that the exclusive contract may be challenged as
violating Section 628(b) of the Act and Section 76.1001(a) of the Commission’s Rules.298
Condition III.2: DIRECTV may enter into an exclusive contract with any Affiliated Program
Rights Holder,299 provided that the exclusive contract may be challenged as violating Section
628(b) of the Act and Section 76.1001(a) of the Commission’s Rules.300
73.
To the extent that any programming covered under such an exclusive contract is cable-
affiliated, the exclusive contract may also be assessed on a case-by-case basis in response to a program
access complaint alleging a violation of Section 628(b) or, potentially, Section 628(c)(2)(B) of the Act.301
III.
FURTHER NOTICE OF PROPOSED RULEMAKING IN MB DOCKET NO. 12-68
A.
Rebuttable Presumptions for Cable-Affiliated RSNs
74.We seek comment on whether to establish (i) a rebuttable presumption that an exclusive
contract for a cable-affiliated RSN (regardless of whether it is terrestrially delivered or satellite-delivered)
See Liberty Media Order, 23 FCC Rcd at 3346-49, Appendix B, § IV; see also id. at 3348-49, Appendix B, § IV.E.2
(providing that the RSN arbitration condition will expire six years after the consummation of the transaction, unless
modified earlier in response to a petition); Letter from Robert L. Hoegle, Counsel for Liberty Media Corp., to Ms.
Marlene H. Dortch, Secretary, FCC, MB Docket No. 07-18 (March 13, 2008) (stating that the transaction was
consummated on February 27, 2008).
298 See Revision of the Commission’s Program Access Rules, et al., Report and Order and Order on Reconsideration,
FCC 12-123, at ¶¶ 72-73 (2012) (“2012 Program Access Order”). The term “Liberty Media” as used in this
Appendix includes any entity or program rights holder in which Liberty Media or John Malone holds an attributable
interest. Thus, the term “Liberty Media” includes Discovery Communications. Liberty Media and DIRECTV are
prohibited from acquiring an attributable interest in any non-broadcast national or regional programming service
while these conditions are in effect if the programming service is not obligated to abide by such conditions.
299 The term “Affiliated Program Rights Holder” includes (i) any program rights holder in which Liberty Media or
DIRECTV holds a non-controlling ‘attributable interest’ (as determined by the FCC’s program access attribution
rules) or in which any officer or director of Liberty Media, DIRECTV, or of any other entity controlled by John
Malone holds an attributable interest; and (ii) any program rights holder in which an entity or person that holds an
attributable interest also holds a non-controlling attributable interest in Liberty Media or DIRECTV, provided that
Liberty Media or DIRECTV has actual knowledge of such entity’s or person’s attributable interest in such program
rights holder.
300 See 2012 Program Access Order at ¶¶ 72-73.
301 See Liberty Media Order, 23 FCC Rcd at 3300-02, ¶¶ 78-80 (explaining that Discovery is a cable-affiliated
programmer due to its affiliation with Advance-Newhouse, which holds an attributable interest in a cable system).
In addition, regardless of whether the programming is cable-affiliated, the Commission has not foreclosed a
challenge under Section 628(b) to an exclusive contract with a cable operator involving non-cable-affiliated
programming. See 1996 OVS Order, 11 FCC Rcd at 18319, ¶ 184 (“[C]able operators, common carriers providing
video programming directly to subscribers and open video system operators are not generally restricted from
entering into exclusive contracts with non-vertically integrated programmers. Nonetheless, as we found in the [1994
DBS Order], our finding herein does not preclude an aggrieved party from seeking relief in an appropriate case
under other provisions of Section 628 and the Commission’s rules thereunder.”) (citing 1994 DBS Order, 10 FCC
Rcd at 3121, 3126-27 (citing 1993 Program Access Order, 8 FCC Rcd at 3374 (discussing Section 628(b))); 2010
Program Access Order, 25 FCC Rcd at 779, ¶ 49 n.191 (“We do not reach any conclusions in this Order, nor do we
foreclose potential complaints, regarding other acts that may be ‘unfair methods of competition or unfair acts or
practices’ under Section 628(b). For example, the rules established by this Order do not address exclusive contracts
between a cable operator and a non-cable-affiliated programmer.”).
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is an “unfair act” under Section 628(b); and (ii) a rebuttable presumption that a complainant challengingan exclusive contract involving a cable-affiliated RSN (regardless of whether it is terrestrially delivered or
satellite-delivered) is entitled to a standstill of an existing programming contract for that RSN during the
pendency of a complaint.
1.
Rebuttable Presumption that an Exclusive Contract for a Cable-Affiliated
RSN is an “Unfair Act”
As discussed above, under the case-by-case process for complaints alleging that an
exclusive contract violates Section 628(b), the complainant will have the burden of proving that the
exclusive contract at issue (i) is an “unfair act” and (ii) has the “purpose or effect” of “significantly
hindering or preventing” the complainant from providing satellite cable programming or satellite
broadcast programming.302 With respect to the second element, we establish above a rebuttable
presumption that an exclusive contract involving a satellite-delivered, cable-affiliated RSN has the
“purpose or effect” of “significantly hindering or preventing” the complainant from providing satellite
cable programming or satellite broadcast programming, as set forth in Section 628(b).303 The
Commission established an identical presumption for terrestrially delivered, cable-affiliated RSNs in the
2010 Program Access Order.304
76.
With respect to the first element (the “unfair act” element), however, the Commission has
not established a rebuttable presumption that an exclusive contract involving a cable-affiliated RSN is an
“unfair act.” In the 2010 Program Access Order, the Commission established a categorical rule that all
exclusive contracts involving terrestrially delivered, cable-affiliated programming (regardless of whether
the programming qualifies as an RSN) are “unfair” under Section 628(b).305 The D.C. Circuit vacated this
aspect of the 2010 Program Access Order, holding that (i) just because Congress treated certain acts
involving satellite programming as “unfair” does not mean the same acts are necessarily “unfair” in the
context of terrestrial programming; (ii) even with respect to satellite-delivered programming, Congress
established a sunset provision for the exclusivity ban and allowed cable operators or cable-affiliated
programmers to seek prior approval to enter into an exclusive contract (neither of which would apply to
terrestrially delivered programming under the 2010 Program Access Order); and (iii) by labeling conduct
“unfair” simply because it might in some circumstances negatively affect competition in the video
distribution market, the Commission failed to consider whether it should treat conduct as “unfair” despite
it being procompetitive in a given instance.306 The court concluded that “if the Commission believes that
conduct involving the withholding of terrestrial programming should be treated as categorically unfair, as
opposed to assessing fairness on a case-by-case basis or perhaps adopting a public interest exception
mirroring the one for satellite programming, then it must grapple with whether its definition of unfairness
would apply to conduct that appears procompetitive and, if so, whether that result would comport with
section 628.”307 Consistent with the court’s decision, as demonstrated by the Verizon v. MSG/Cablevision
and AT&T v. MSG/Cablevision cases, the Commission to date has elected to address whether challenged
conduct, including an exclusive contract, is “unfair” on a case-by-case basis.308
302 See supra ¶ 53.
303 See supra ¶ 55.
304 See 2010 Program Access Order, 25 FCC Rcd at 782-83, ¶ 52.
305 See id. at 778-80, ¶¶ 48-49.
306 See Cablevision II, 649 F.3d at 720-22.
307 Id. at 723 (emphasis added).
308 See supra n.10.
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77.We seek comment on whether to establish a rebuttable presumption that an exclusive
contract for a cable-affiliated RSN (regardless of whether it is terrestrially delivered or satellite-delivered)
is an “unfair act” under Section 628(b).309 The D.C. Circuit has explained that an evidentiary
presumption is only permissible (i) “if there is a sound and rational connection between the proved and
inferred facts” and (ii) “when proof of one fact renders the existence of another fact so probable that it is
sensible and timesaving to assume the truth of [the inferred] fact … until the adversary disproves it.”310
Would a rebuttable presumption that an exclusive contract for a cable-affiliated RSN is an “unfair act”
under Section 628(b) satisfy this requirement? The Commission has held that determining whether
challenged conduct is “unfair” requires “balancing the anticompetitive harms of the challenged conduct
against the procompetitive benefits.”311 What are the potentially procompetitive benefits of an exclusive
contract for a cable-affiliated RSN? How do these potential benefits compare to the potentially
anticompetitive harms of an exclusive contract for a cable-affiliated RSN? We ask commenters to
provide evidence supporting their positions.
2.
Rebuttable Presumption that a Complainant Challenging an Exclusive
Contract Involving a Cable-Affiliated RSN is Entitled to a Standstill
As discussed above, the Commission in the 2010 Program Access Order established a
process whereby a complainant may seek a standstill of an existing programming contract during the
pendency of a complaint.312 The complainant has the burden of proof to demonstrate how grant of the
standstill will meet the following four criteria: (i) the complainant is likely to prevail on the merits of its
complaint; (ii) the complainant will suffer irreparable harm absent a stay; (iii) grant of a stay will not
substantially harm other interested parties; and (iv) the public interest favors grant of a stay.313
79.
We seek comment on whether to establish a rebuttable presumption that a complainant
challenging an exclusive contract involving a cable-affiliated RSN (regardless of whether it is terrestrially
delivered or satellite-delivered) is entitled to a standstill of an existing programming contract for that RSN
during the pendency of a complaint. Would such a rebuttable presumption meet the requirements for
establishing such a presumption as set forth by the D.C. Circuit described above?314 Would this
rebuttable presumption meet the requirements set forth by the D.C. Circuit only if we also establish a
rebuttable presumption that an exclusive contract for a cable-affiliated RSN is an “unfair act” under
309 As the Commission and the D.C. Circuit have explained, “a rebuttable presumption does not shift the burden of
proof to defendants; rather, it requires defendants to come forward with evidence that rebuts or meets the
presumption.” Verizon v. MSG/Cablevision (Commission Order), 26 FCC Rcd at 15863, ¶ 20; see AT&T v.
MSG/Cablevision (Commission Order), 26 FCC Rcd at 15885, ¶ 20; see also Cablevision II, 649 F.3d at 716
(“Reviewing the Commission’s order, we think it clear that its rebuttable presumptions shift only the burden of
production.”).
310 Cablevision II, 649 F.3d at 716.
311See, e.g., Verizon v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13160-77, ¶¶ 18-41 (finding that
withholding of the HD versions of the MSG and MSG+ RSNs from Verizon was an “unfair act”), affirmed, Verizon
v. MSG/Cablevision (Commission Order), 26 FCC Rcd at 15852-53, ¶ 8 (“Determining whether challenged conduct is
‘unfair’ requires balancing the anticompetitive harms of the challenged conduct against the procompetitive
benefits.”); AT&T v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13222-40, ¶¶ 19-42 (finding that withholding
of the HD versions of the MSG and MSG+ RSNs from AT&T was an “unfair act”), affirmed, AT&T v.
MSG/Cablevision (Commission Order), 26 FCC Rcd at 15874-75, ¶ 8 (“Determining whether challenged conduct is
‘unfair’ requires balancing the anticompetitive harms of the challenged conduct against the procompetitive
benefits.”), appeal pending sub nom. Cablevision Sys. Corp. et al. v. FCC, No. 11-4780 (2nd Cir.).
312 See 2010 Program Access Order, 25 FCC Rcd at 794-97, ¶¶ 71-75; see also 47 C.F.R. § 76.1003(l).
313 See 47 C.F.R. § 76.1003(l).
314 See supra ¶ 77; see also Cablevision II, 649 F.3d at 716.
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Section 628(b)? Are the rebuttable presumptions applicable to the “unfair act” (if adopted) and“significant hindrance” elements of a Section 628(b) claim rationally related only to the “likelihood to
prevail on the merits” prong of the four-part test for a standstill? What basis would there be for rationally
presuming the other three elements of the test for a standstill (irreparable harm, no significant harm to
other parties, and public interest) for purposes of establishing a standstill presumption for claims
involving cable-affiliated RSNs? We ask commenters to provide evidence supporting their positions.
B.
Other Rebuttable Presumptions
1.Rebuttable Presumptions for Exclusive Contracts Involving Cable-Affiliated
National Sports Networks
We seek comment on whether to establish rebuttable presumptions with respect to the
“unfair act” element and/or the “significant hindrance” element of a Section 628(b) claim challenging an
exclusive contract involving a cable-affiliated “national sports network” (regardless of whether it is
terrestrially delivered or satellite-delivered). How should the Commission define a “national sports
network”? What cable-affiliated national sports networks exist today? Would these rebuttable
presumptions meet the requirements for establishing such presumptions as set forth by the D.C. Circuit
described above?315 On what basis can the Commission conclude that these networks have no good
substitutes, are important for competition, and are non-replicable, as the Commission has found with
respect to RSNs?316 We ask that commenters provide reliable, empirical data supporting their positions
and address Commission precedent.317 We also request comment on whether and how these rebuttable
presumptions would be consistent with the First Amendment. To the extent we adopt these rebuttable
presumptions, should we also adopt a rebuttable presumption that a complainant challenging an exclusive
contract involving a cable-affiliated national sports network (regardless of whether it is terrestrially
delivered or satellite-delivered) is entitled to a standstill of an existing programming contract for that
network during the pendency of a complaint?
2.
Rebuttable Presumption for Previously Challenged Exclusive Contracts
81.We seek comment on whether the Commission should establish a rebuttable presumption
that, once a complainant succeeds in demonstrating that an exclusive contract involving a cable-affiliated
network (regardless of whether it is terrestrially delivered or satellite-delivered) violates Section 628(b)
(or, potentially, Section 628(c)(2)(B)), any other exclusive contract involving the same network violates
Section 628(b) (or Section 628(c)(2)(B)). While we sought comment on this issue in the NPRM,318 we
conclude above that the record on this issue was not sufficiently developed.319 Would this rebuttable
presumption meet the requirements for establishing such a presumption as set forth by the D.C. Circuit
described above?320 Is there a reasonable basis for presuming liability based on a prior determination of a
Section 628(b) violation involving the same network? How would differences among complainants
315 See supra ¶ 77; see also Cablevision II, 649 F.3d at 716.
316 See supra ¶ 55.
317 See 2010 Program Access Order, 25 FCC Rcd at 777 n.182 (discussing exclusive arrangements for “out-of-
market, non-regional sports programming” and concluding that commenters “failed to provide evidence in the
record of this proceeding of any harm to competition resulting from these arrangements”); 2007 Extension Order, 22
FCC Rcd at 17843 n.380 (discussing national sports programming and concluding that “[u]nlike in the case of cable-
affiliated regional sports programming, we have no evidence that the inability to access this sports programming has
impacted MVPD subscribership”).
318 See NPRM, 27 FCC Rcd at 3443, ¶ 56.
319 See supra n.237.
320 See supra ¶ 77; see also Cablevision II, 649 F.3d at 716.
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(e.g., differences in the complainants’ market power) or changing circumstances over time (e.g., whetherthe network continues to carry the same highly coveted content) impact such a presumption? If we
establish such a rebuttable presumption, should it be time limited? If we establish such a rebuttable
presumption, should it apply if the complaints concern the same network but different geographic
markets?
C.
Buying Groups
82.We also solicit comment on possible modifications to the program access rules relating to
buying groups. ACA filed comments in this proceeding asserting that revisions to the program access
rules are needed to ensure that buying groups utilized by small and medium-sized MVPDs can avail
themselves of the program access rules.321 ACA seeks three modifications to the program access rules:
(i) revision of the definition of “buying group” to accurately reflect the level of liability assumed by
buying groups under current industry practices; (ii) establishment of standards for the right of buying
group members to participate in their group’s master licensing agreements; and (iii) establishment of a
standard of comparability for a buying group regarding volume discounts.322 In addition to seeking
comment on ACA’s proposed modifications, we propose to revise our definition of “buying group” to
provide that a buying group may not unreasonably deny membership to any MVPD requesting
membership.
1.
Definition of “Buying Group”
83.As ACA explains, buying groups play an important role in the market for video
programming distribution, both for small and medium-sized MVPDs and for programmers.323 A buying
group negotiates master agreements with video programmers that its MVPD members can opt into and
then acts as an interface between its members and the programmers so that the programmers are able to
deal with a single entity.324 Thus, a buying group is generally able to obtain lower license fees for its
members than they could obtain through direct deals with the programmers and lower transaction costs
for programmers by enabling them to deal with a single entity, rather than many individual MVPDs, for
their negotiations and fee collections.325 Because small and medium-sized MVPDs rely on buying groups
as the primary means by which they purchase their programming, ACA asserts that small and medium-
sized MVPDs are protected under the program access rules only to the extent that buying groups are
321 See ACA Comments at 11-12; Letter from Barbara S. Esbin, Counsel for ACA, to Marlene H. Dortch, Secretary,
FCC, MB Docket Nos. 12-68, 07-18, 05-192 (August 2, 2012), Attachment at 5 (“ACA August 2, 2012 Ex Parte
Letter”); see also Cox Reply Comments at 3 (“Cox . . . agrees with ACA’s requests for reform of the rules
governing buying groups to make such groups more useful to small and mid-sized operators.”); Mediacom Reply
Comments at 9 (“Mediacom agrees with ACA that the current rules do not provide buying groups the protection
Congress intended.”).
322 See ACA Comments at 15; ACA August 2, 2012 Ex Parte Letter at 2.
323 See ACA Comments at 12.
324 See id. at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 3.
325 See ACA Comments at 12, Appendix A, Report of William P. Rogerson, Professor of Economics, Northwestern
University (“Rogerson Report”), at 9 (“From an economic perspective, the main efficiency that a buying group
creates is that it dramatically reduces the transactions costs for a programmer of separately dealing with a large
number of small and medium sized MVPDs by allowing the programmer to deal instead with a single entity to
negotiate and administer contracts. Programmers benefit from reduced transactions costs and some of these benefits
are passed on to MVPDs in the form of lower rates.”); ACA August 2, 2012 Ex Parte Letter, Attachment at 3; see
also 1993 Program Access Order, 8 FCC Rcd at 3411, ¶ 114 (“We agree with commenters that buying groups or
purchasing agents can offer some economies of scale or other efficiencies to programming vendors which would
justify price discounts under the statute.”).
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given the same protection in their dealings with cable-affiliated programmers as individual MVPDs aregiven.326 ACA notes that Congress, recognizing small MVPDs’ reliance on buying groups, explicitly
extended the non-discrimination protections of Section 628(c)(2)(B) of the Act to buying groups.327 The
Commission likewise extended the protections of the non-discrimination provision of the program access
rules to buying groups by including “buying groups” within the definition of “multichannel video
programming distributor” set forth in Section 76.1000(e) of the Commission’s program access rules.328
84.
Although Congress did not define the term “buying group,” the Commission has adopted
a definition for this term. Section 76.1000(c) of the Commission’s rules sets forth the requirements that
an entity must satisfy in order to be considered a “buying group” eligible to avail itself of the non-
discrimination protections afforded to MVPDs under the program access rules.329 One of these
requirements pertains to the liability of the buying group or its members to the programmer for
payments.330 The Commission has established three alternative ways for the buying group to satisfy this
requirement. First, the entity seeking to qualify as a “buying group” may agree “to be financially liable
for any fees due pursuant to a . . . programming contract which it signs as a contracting party as a
representative of its members” (the “full liability” option).331 Second, the members of the buying group,
as contracting parties, may agree to joint and several liability (the “joint and several liability” option).332
Third, the entity seeking to qualify as a “buying group” may maintain liquid cash or credit reserves equal
326 See ACA Comments at 12-13, Rogerson Report at 9; ACA August 2, 2012 Ex Parte Letter, Attachment at 4.
327 See ACA Comments at 13; ACA August 2, 2012 Ex Parte Letter, Attachment at 3; see also 47 U.S.C. §
548(c)(2)(B) (prohibiting discrimination by a vertically integrated satellite cable programming vendor “among or
between cable systems, cable operators, or other multichannel video programming distributors, or their agents or
buying groups . . . .”) (emphasis added). The legislative history of Section 628(c)(2)(B) also reflects Congress’s
intent to afford small MVPDs that purchase programming through buying groups the same protection against
discrimination as other MVPDs. See S. REP. NO. 102-92, at 25 (1991), reprinted in 1992 U.S.C.C.A.N. 1133, 1160
(“To address the complaints of small cable operators that cable programmers will not deal with them or will
unreasonably discriminate against them in the sale of programming, the legislation requires vertically integrated,
national cable programmers to make programming available to all cable operators and their buying agents on similar
price, terms, and conditions.”); H.R. CONF. REP. NO. 102-862, at 91 (1992), reprinted in 1992 U.S.C.C.A.N. 1231,
1273 (“National and regional programmers affiliated with cable operators are required by the Senate bill to offer
their programming to buying groups on terms similar to those offered to cable operators.”).
328 See ACA Comments at 13; ACA August 2, 2012 Ex Parte Letter, Attachment at 3; see also 47 C.F.R. §
76.1000(e) (defining “multichannel video programming distributor” as “an entity engaged in the business of making
available for purchase, by subscribers or customers, multiple channels of video programming. Such entities include,
but are not limited to a cable operator, a BRS/EBS provider, a direct broadcast satellite service, a television receive-
only satellite program distributor, and a satellite master antenna television system operator, as well as buying groups
or agents of all such entities.”); 1993 Program Access Order, 8 FCC Rcd at 3362 n.3 (including buying groups
under the definition of “multichannel video programming distributor” for purposes of the program access rules).
329 See 47 C.F.R. § 76.1000(c).
330 In addition to satisfying this requirement, the entity seeking to qualify as a “buying group” must also agree (i) to
uniform billing and standardized contract provisions for individual members; and (ii) either collectively or
individually, on reasonable technical quality standards for individual members of the group. See 47 C.F.R. §
76.1000(c)(2), (3).
331 47 C.F.R. § 76.1000(c)(1); see also 1993 Program Access Order, 8 FCC Rcd at 3412, ¶ 115.
332 See 47 C.F.R. § 76.1000(c)(1); see also 1993 Program Access Order, 8 FCC Rcd at 3412, ¶ 115.
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to the cost of one month of programming fees for all buying group members and each member of thebuying group must remain liable for its pro rata share (the “cash reserve” option).333
85.
ACA asserts that none of these alternative liability options reflects current industry
practice. First, with respect to the “full liability” option, ACA asserts that buying groups, such as the
National Cable Television Cooperative (“NCTC”),334 never assume full liability for the contractual
commitment that each member company makes when it opts into a master agreement.335 Rather, NCTC’s
obligation is limited to forwarding any payments that are received from members to the programmer and
notifying the programmer of any default by one of its members.336 Additionally, NCTC’s general practice
is to deal with delinquent members by terminating their membership and thus all of the master agreements
of the delinquent member.337 Second, with respect to the “joint and several liability” option, ACA notes
that NCTC found this option impracticable because it would interfere with some members’ loan
covenants as to debt and result in fewer MVPDs being able to participate in NCTC master agreements.338
Third, with respect to the “cash reserve” option, ACA notes that NCTC’s standard practice in its early
years was to require its members to deposit 30 days of payments into an escrow account when they opted
into a master agreement, but programmers and NCTC eventually decided this protection was
unnecessary.339
333 See 1998 Program Access Order, 13 FCC Rcd at 15859, ¶ 78. ACA notes that the changes to Section
76.1000(c)(1) to reflect the “cash reserve” option were not included in the 1998 Program Access Order and that a
subsequent Erratum making the relevant changes to Section 76.1000(c)(1) was not published in the Federal
Register. See ACA Comments at 22-23, Rogerson Report at 14-15; see also 1998 Program Access Order, 13 FCC
Rcd at 15862, Appendix A; Implementation of the Cable Television Consumer Protection and Competition Act of
1992, Petition for Rulemaking of Ameritech New Media, Inc. Regarding the Development of Competition and
Diversity in Video Programming Distribution and Carriage, Erratum, 14 FCC Rcd 18611, 18611-12 (CSB 1999).
While ACA notes that, as a result, the changes to Section 76.1000(c)(1) to reflect the “cash reserve” option are not
reflected in the Code of Federal Regulations, a summary of the 1998 Program Access Order, including a discussion
of the “cash reserve” option, was published in the Federal Register and is thus a binding rule. See Development of
Competition and Diversity in Video Programming Distribution and Carriage, 63 FR 45740-02, 45742 (1998); see
also Application for Consent to the Transfer of Control of Licenses, XM Satellite Radio Holdings Inc., Transferor, to
Sirius Satellite Radio Inc., Transferee, 23 FCC Rcd 12348, 12420-22, ¶¶ 156-61 (2008); General Elec. v. EPA, 290
F.3d 377, 383 (D.C. Cir. 2002).
334 NCTC is a buying group with approximately 910 member companies representing approximately 25 million
MVPD subscribers. NCTC’s members vary widely in size, from a few dozen subscribers to several million
subscribers. More than half of NCTC’s 910 members have fewer than 1,000 subscribers, while a little over 100 of
its members have more than 10,000 subscribers. In addition to negotiating the rates, terms, and conditions of master
agreements with programmers, NCTC acts as an interface for all billing and collection activities between its member
companies and the programmer. See ACA Comments at 17, Appendix B, Declaration of Frank Hughes, Senior Vice
President of Member Services for NCTC (“NCTC Declaration”), at 2.
335 See ACA Comments at 18, 23, Rogerson Report at 11, NCTC Declaration at 3; ACA August 2, 2012 Ex Parte
Letter, Attachment at 7.
336 See ACA Comments at 18, 23, Rogerson Report at 11.
337 See ACA Comments at 18, NCTC Declaration at 4.
338 See ACA Comments, NCTC Declaration at 3. In addition, ACA states that it is unlikely that a buying group that
attempted to impose joint and several liability on its membership would be viable because potential members would
simply be unwilling to risk being responsible for the failure to pay of all of the other members. See ACA
Comments, Rogerson Report at 13, n.3. Since programmers would likely target recovery efforts on the largest and
financially strongest members, ACA believes that those MVPDs would be particularly unwilling to join the buying
group. See id.
339 See ACA Comments, Rogerson Report at n.15.
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86.According to ACA, programmers have widely accepted NCTC’s current business model,
including the reduced level of liability that NCTC assumes under a master agreement.340 Because the
existing definition of “buying group” does not conform to these widely accepted practices, ACA asserts
that NCTC is effectively barred from bringing a program access complaint concerning a master
agreement on behalf of its member companies.341 ACA accordingly recommends that the Commission
modernize the definition of “buying group” in Section 76.1000(c)(1) by adding, as an alternative to the
existing liability options, a requirement that the entity seeking to qualify as a “buying group” assumes
liability to forward all payments due and received from its members for payment under a master
agreement to the appropriate programmer.342
87.
Based on ACA’s comments, it appears that our existing definition of “buying group” set
forth in Section 76.1000(c)(1) does not reflect accepted industry practices and thus may have the
unintended effect of barring some buying groups from availing themselves of the protections of the non-
discrimination provision of the program access rules, in contravention of Congress’s express intent in
enacting Section 628(c)(2)(B) of the Act.343 We tentatively conclude that we should revise Section
76.1000(c)(1) to require, as an alternative to the current liability options, that the buying group agree to
assume liability to forward all payments due and received from its members for payment under a master
agreement to the appropriate programmer.344 We seek comment on this tentative conclusion. We also
seek comment on whether NCTC’s practices in terms of the level of liability it assumes under a master
agreement are consistent with that of other buying groups. To the extent that the practices of other buying
groups differ, how do they differ?
88.
We note that the Commission adopted the liability options in Section 76.1000(c)(1) to
address concerns about the creditworthiness and financial stability of buying groups and protect
programmers from excessive financial risk.345 We do not believe that revising the definition of buying
group as discussed above would subject programmers to greater financial risk when contracting with a
buying group than they would be when contracting with an individual MVPD.346 According to ACA, if
an individual MVPD defaults on its payments for programming, a programmer may attempt to require the
MVPD to continue making payments over the life of the agreement, or it may cease delivery of the
programming to the MVPD.347 ACA states that the programmer’s legal rights are the same regardless of
340 See ACA Comments at 18, NCTC Declaration at 3.
341 See ACA Comments at 23.
342 See id. at 24; ACA August 2, 2012 Ex Parte Letter, Attachment at 8; see also Mediacom Reply Comments at 9
(“supports ACA’s recommendation that the Commission update its buying group definition so that it more closely
reflects the financial relationship that has evolved between buying groups and programmers.”).
343 See supra n. 330.
344 As discussed above, the changes to Section 76.1000(c)(1) to reflect the “cash reserve” option adopted in the 1998
Program Access Order are not reflected in the Code of Federal Regulations. See supra n.336. We intend to
conform Section 76.1000(c)(1) as amended in this proceeding to the amendment previously adopted in the 1998
Program Access Order.
345 See 1993 Program Access Order, 8 FCC Rcd at 3411, ¶ 114 (concluding that “in order to benefit from treatment
as a single entity for purposes of subscriber volume, a buying group should offer vendors similar advantages or
benefits as a single purchaser, including for example, some assurance of satisfactory financial and technical
performance”); see also 1994 Program Access Order, 10 FCC Rcd at 1948, ¶ 103 (affirming Section 76.1000(c) as
adopted but clarifying that, in situations where a programmer has reasonable doubts about the financial stability and
responsibility of a buying group, it may insist on appropriate assurances of creditworthiness).
346 See ACA Comments at 25, Rogerson Report at 12-14.
347 See ACA Comments at 25, Rogerson Report at 11-12.
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whether the defaulting MVPD has purchased service on an individual basis or through a buying group.348Moreover, we note that NCTC’s general practice of terminating membership, and thus all of the master
agreements, of a delinquent member, may reduce the risk of delinquency, which could provide the
programmer greater protection than when dealing with an individual MVPD.349 We invite commenters to
address whether the proposed revision to the buying group definition sufficiently protects programmers
from financial risks in dealing with buying groups. If not, what additional measures are needed to protect
programmers from financial risk? Should we codify NCTC’s practice of terminating membership and all
of the master agreements of a delinquent member? Do other buying groups utilize this same practice?
89.
We further propose to revise the definition of “buying group” to provide that a buying
group may not unreasonably deny membership to any MVPD requesting membership. As ACA submits,
“[b]uying groups play an extremely important role in today’s marketplace, for both small and medium-
sized MVPDs,” because they provide “significantly lower license fees for [their] members than these
MVPDs could obtain through direct deals with programmers.”350 Although a buying group would
presumably benefit from increasing its membership in order to obtain better deals from programmers, we
are aware of allegations in recent years that NCTC has denied membership to certain MVPDs.351 In light
of the significance of buying groups in the marketplace today and Congress’s recognition of the
importance of buying groups for small MVPDs, we propose to require that a “buying group” eligible to
receive the benefits of the non-discrimination provision of the program access rules may not unreasonably
deny membership to any MVPD requesting membership. Under this proposal, a buying group would not
be required to accept all members. Rather, it would only be prohibited from “unreasonably” denying
membership. For example, if an MVPD seeking membership has a history of defaulting on its payments
for programming, or if there are legitimate antitrust reasons for denying membership to a particular
MVPD, then the buying group’s denial of membership would not be “unreasonable.” Upon being denied
membership, an MVPD could file a Petition for Declaratory Ruling that the buying group no longer
qualifies as a “buying group” as defined in Section 76.1000(c) because it has “unreasonably” denied the
MVPD membership. The central issue in the Declaratory Ruling proceeding would be whether the
buying group’s conduct in denying membership was “unreasonable.” If the Commission finds that the
buying group’s conduct was “unreasonable,” the buying group would no longer be eligible to receive the
348 See ACA Comments at 25, Rogerson Report at 14. ACA states that the lag after which a programmer becomes
aware that an MVPD has ceased making payments is generally about the same regardless of whether the
programmer contracts directly with the MVPD or whether it contracts with the MVPD through NCTC. In both
cases, the delinquent MVPD may receive between 30 and 60 days of “free” programming before the programmer
becomes aware that the MVPD has ceased paying its bills and is able to cut off programming. See ACA Comments
at 25, Rogerson Report at 12.
349 See ACA Comments at 26, Rogerson Report at 13.
350 ACA Comments at 12, NCTC Declaration at 2.
351 See Sarah Reedy, NCTC to Lift Membership Moratorium, But Are Telcos Eligible? (Sept. 5, 2008), available at
http://connectedplanetonline.com/iptv/news/nctc-membership-moratorium-lifted-0905/ (stating that NCTC had a
moratorium on new members from 2005 to January 2009); see also Lafayette City-Parish Consolidated Government
of Lafayette, Louisiana, d/b/a Lafayette Utilities System v. National Cable Television Cooperative, Inc. et. al, 26
FCC Rcd 7690 (MB 2011) (“LUS v. NCTC”). In LUS v. NCTC, an MVPD filed a complaint against NCTC and
various cable operators that had employees serving on NCTC’s Board of Directors, alleging that NCTC’s denial of
membership constituted an “unfair act” of a cable operator that “significantly hindered” the MVPD in violation of
Section 628(b) of the Act. See LUS v. NCTC, 26 FCC Rcd at 7692, ¶¶ 6-7. The complaint was subsequently
dismissed at LUS’s request after the parties reached a settlement. See Lafayette City-Parish Consolidated
Government of Lafayette, Louisiana, d/b/a Lafayette Utilities System v. CableOne, Inc. et. al, 27 FCC Rcd 5030,
5031, ¶ 2 (MB 2012).
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benefits of the non-discrimination provision of the program access rules. We seek comment on thisproposal.
90.
We invite commenters to discuss the potential costs and benefits of each of the proposed
revisions of the buying group definition. To the extent possible, we encourage commenters to quantify
any costs and benefits and submit supporting data. Commenters that propose an alternative approach
should similarly provide data regarding the costs and benefits of the alternative approach.
2.
Participation of Buying Group Members in Master Agreements
91.ACA also urges the Commission to revise the program access rules to prohibit cable-
affiliated programmers from unreasonably preventing particular members of a buying group from opting
into a master agreement.352 ACA contends that, while the program access rules prohibit unfair methods
of competition and discriminatory practices, including selective refusals to license, these rules do not
explicitly restrain the ability of a cable-affiliated programmer to unreasonably prevent particular members
of a buying group from participating in a master agreement, even if the member normally purchases a
substantial share of its programming from the buying group.353 ACA asserts that if a cable-affiliated
programmer had the right to arbitrarily exclude any buying group member that it wished from a master
agreement, the requirement that cable-affiliated programmers negotiate non-discriminatory agreements
with buying groups could be rendered meaningless.354
92.
To remedy its concern, ACA recommends that the Commission adopt clear and easily
verifiable standards for determining when a buying group member is presumptively allowed to participate
in a master agreement with a cable-affiliated programmer.355 Specifically, ACA suggests that the
Commission establish a “safe harbor” subscriber level for buying group member MVPDs to participate in
a master agreement.356 Under ACA’s proposed approach, a buying group member MVPD with no more
than the “safe harbor” number of subscribers would be presumptively entitled to participate in master
agreements between the programmer and the buying group.357 A buying group member MVPD which
has more than the safe harbor number of subscribers would also be entitled to participate if it
demonstrates that it incurs some specified minimum share of its total expenditures on programming
through the buying group.358 Further, when an expiring master agreement is up for renewal, buying group
members participating in the expiring agreement would have the right to participate in the renewed
agreement.359 ACA states that, as a consequence of this safe harbor, it would be a violation of the Section
628(c)(2)(B) prohibition on discriminatory practices for a cable-affiliated programmer to refuse to deal
with a buying group member that regularly participates in a master agreement.360 Although not
mentioned by ACA, consistent with Section 628(c)(2)(B), a cable-affiliated programmer could refuse to
352 See ACA Comments at 27-28, Rogerson Report at 15; ACA August 2, 2012 Ex Parte Letter, Attachment at 9. A
“master agreement” is the affiliation agreement NCTC negotiates with a programmer that its members may opt into.
353 See ACA Comments at 27-28, Rogerson Report at 15; ACA August 2, 2012 Ex Parte Letter, Attachment at 9.
354 See ACA Comments at 27-28, Rogerson Report at 15.
355 See ACA Comments at 28, Rogerson Report at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 9.
356 See ACA Comments at 28-29, Rogerson Report at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 12.
357 See ACA Comments at 28-29, Rogerson Report at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 12.
358 See ACA Comments at 29, Rogerson Report at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 12.
359 See ACA Comments at 29, Rogerson Report at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 12.
360 See ACA Comments at 29, Rogerson Report at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 12.
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deal with a buying group member for a legitimate business reason, such as the distributor’s history ofdefaulting on other programming contracts.361
93.
We seek comment generally on the need for a safe harbor for buying group participation
in master agreements and, more specifically, on ACA’s proposed safe harbor. Although several
commenters make generalized allegations that cable-affiliated programmers have excluded particular
buying group members from participating in master agreements negotiated with the buying group,362 we
have not received information regarding specific instances in which such exclusions have occurred. We
seek detailed information on the extent to which the exclusion of particular buying group members from
participation in master agreements has occurred in the past or is occurring now. To the extent that some
buying group members are being excluded from participating in master agreements, why are they being
excluded?
94.
If we determine that it is necessary to establish a safe harbor for buying group
participation in master agreements, what subscriber level should we establish as the safe harbor? ACA
suggests that we set the safe harbor subscriber number at 3 million subscribers.363 Is this an appropriate
safe harbor subscriber number? Commenters that recommend a specific safe harbor subscriber number
should explain the basis for their recommendation. Further, under ACA’s suggested approach, a buying
group member with more than the safe harbor number of subscribers would be entitled to participate in a
master agreement if it demonstrates that it incurs some specified minimum share of its total expenditures
on programming through the buying group. What minimum share of programming expenditures should
such a buying group member have to incur through the buying group in order to be entitled to participate
in a master agreement and over what period of time? ACA suggests that we require a buying group
member with more than the safe harbor number of subscribers to demonstrate that the share of
programming that it licenses through the buying group is not significantly smaller than the average share
of programming that other buying group members license through the buying group.364 We seek
comment on this proposal. What share of programming should be considered “significantly smaller” than
361 See 1993 Program Access Order, 8 FCC Rcd at 3412-13, ¶ 116.
362 See ACA Comments, NCTC Declaration at 2 (“The largest four members of the NCTC do not currently license
substantial amounts of programming through the NCTC, often due to the insistence of the programmer and over the
strong objection of NCTC.”); Cox Reply Comments at 3 n.10 (“Cox has firsthand experience with programmers
refusing to permit it to opt into agreements despite Cox’s membership in the [NCTC].”); OPASTCO/NTCA Reply
Comments at 5 n.17 (“Furthermore, a number of small MVPDs . . . may still be restricted by programmer
requirements that prohibit the MVPD from obtaining content through a buying group. In some cases, this
requirement persists even beyond the expiration date of the content access agreement.”).
363 See Letter from Barbara S. Esbin, Counsel for ACA, to Marlene H. Dortch, Secretary, FCC, MB Docket Nos. 12-
68, 07-18, 05-192 (August 31, 2012), Attachment at 4 (“ACA August 31, 2012 Ex Parte Letter”); see also ACA
August 2, 2012 Ex Parte Letter, Attachment at 12. ACA explains that the four largest NCTC members, which do
not currently license substantial amounts of programming through NCTC, each have more than 3 million
subscribers, while the remaining members in the group of the largest 25 members, which do license substantial
amounts of programming through NCTC, currently have less than 1.5 million subscribers. See id. at 11; see also
ACA Comments, Rogerson Report at 16 (stating that the safe harbor level should be set so that MVPDs that
regularly purchase programming through NCTC are included in the safe harbor). ACA also states that its proposed
safe harbor is consistent with the approach the Commission took in establishing an arbitration remedy for small and
medium-sized MVPDs in the Comcast/NBCU Order. See ACA Comments at 29, Rogerson Report at 16; ACA
August 2, 2012 Ex Parte Letter, Attachment at 13; see also Comcast/NBCU Order, 26 FCC Rcd at 4262, ¶ 58 and
4368, Appendix A, Condition VII.D.1 (specifying that MVPDs with 1.5 million or fewer subscribers may choose to
appoint an independent agent to bargain and arbitrate collectively on their behalf for access to Comcast-NBCU
affiliated programming).
364 See ACA August 31, 2012 Ex Parte Letter, Attachment at 4.
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the average share for purposes of this proposal? Over what period of time should we measure the“average share” of programming that other buying group members license through the buying group? In
addition, we seek comment on ACA’s proposal that, when an expiring master agreement is up for
renewal, buying group members participating in the expiring agreement would have the right to
participate in the renewed agreement. We also invite commenters to suggest any alternatives to ACA’s
proposed safe harbors and explain why the alternative is preferable or less burdensome. For example,
would it be preferable to simply require that, if a cable-affiliated programmer enters into a master
agreement with a buying group, all buying group members have a right to participate in the master
agreement? What are the potential costs and benefits of ACA’s safe harbor approach and any alternative
proposals? Commenters should quantify any potential costs and benefits to the extent possible and
provide supporting data.
3.
Standard of Comparability for Buying Groups Regarding Volume Discounts
95.The Commission has explained that a complainant MVPD alleging program access
discrimination must make a prima facie showing that there is a difference between the rates, terms, or
conditions charged or offered by a cable-affiliated programmer to the complainant MVPD and to a
“competing distributor.”365 The Commission has explained that buying groups that are “fundamentally
national in operation” may make a comparison to the rates, terms, or conditions charged or offered by a
cable-affiliated programmer to a “national competitor.”366 Once the complainant MVPD establishes a
prima facie case of discrimination, the defendant programmer must demonstrate that the difference in
prices, terms, and conditions is justified by the four factors set forth in Section 628(c)(2)(B)(i)-(iv) of the
Act.367 One of those factors allows programmers to use volume-related justifications to establish price
differentials.368 If the programmer believes that the complainant MVPD and the “competing distributor”
are not sufficiently similar, and thus cannot be realistically compared, it can state its reasons for this
conclusion and submit an alternative contract for comparison with another more “similarly situated”
365 See 1993 Program Access Order, 8 FCC Rcd at 3400-01, ¶ 96 and 3416, ¶ 125; see also 47 C.F.R. §
76.1003(c)(4).
366 Buying groups that are “fundamentally national in operation may make initial comparisons with respect to
vendors’ contracts with a national competitor, provided that the complaint includes a justification for that
comparison.” 1993 Program Access Order, 8 FCC Rcd at 3400-01, ¶ 96 n.158; see also id. at 3412, ¶ 115 n.195
(“[O]ur rules for identifying ‘competing’ distributors will treat a particular buying group as a single local, regional,
or national distributor depending upon the fundamental nature of its operation.”). The Commission has explained
that buying groups that are “fundamentally local in operation must draw comparisons with respect to competitors
that have some overlap in actual or proposed service area.” Id. at 3400-01, ¶ 96 n.158.
367 See 47 U.S.C. § 548(c)(2)(B)(i)-(iv); 47 C.F.R. § 76.1002(b)(1)-(4); see also 47 C.F.R. § 76.1003(e)(3); 1993
Program Access Order, 8 FCC Rcd at 3401-02, ¶ 99 and 3417, ¶ 127.
368 See 47 U.S.C. § 548(c)(2)(B)(iii) (providing that it is not impermissibly discriminatory for a satellite-delivered,
cable-affiliated programmer to “establish[] different prices, terms, and conditions which take into account
economies of scale, cost savings, or other direct and legitimate economic benefits reasonably attributable to the
number of subscribers served by the distributor”); 47 C.F.R. § 76.1002(b)(3) note (“Vendors may use volume-
related justifications to establish price differentials to the extent that such justifications are made available to
similarly situated distributors on a technology-neutral basis. When relying upon standardized volume-related factors
that are made available to all multichannel video programming distributors using all technologies, the vendor may
be required to demonstrate that such volume discounts are reasonably related to direct and legitimate economic
benefits reasonably attributable to the number of subscribers served by the distributor if questions arise about the
application of that discount. In such demonstrations, vendors will not be required to provide a strict cost
justification for the structure of such standard volume-related factors, but may also identify non-cost economic
benefits related to increased viewership.”).
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alternative MVPD.369 The Commission’s rules provide that the analysis of whether an alternative MVPDis properly comparable to the complainant includes consideration of, but is not limited to, the following
factors: (i) whether the alternative MVPD operates within a geographic region proximate to the
complainant; (ii) whether the alternative MVPD has roughly the same number of subscribers as the
complainant; and (iii) whether the alternative MVPD purchases a similar service as the complainant.370
Moreover, the Commission’s rules provide that the alternative MVPD “must use the same distribution
technology as the ‘competing’ distributor with whom the complainant seeks to compare itself.”371
96.
ACA proposes that we amend our rules to clarify that the standard to be applied in
determining whether buying groups are being discriminated against is the same as that applied to an
individual MVPD providing the same number of subscribers to the programmer.372 In other words, ACA
states, for purposes of determining whether prices offered to a buying group are discriminatory, the
buying group should be considered “similarly situated” to an individual MVPD offering the programmer
the same number of subscribers.373 According to ACA, “the utility of the program access rules has been
dramatically undercut for buying groups because the Commission has never established a clear standard
upon which a buying group is to be compared for purposes of determining whether it is being
discriminated against by a cable-affiliated programmer.”374
97.
We invite comment on ACA’s proposal. In particular, we seek comment on whether and
how any perceived lack of clarity regarding the standard of comparability for buying groups has affected
negotiations between buying groups and cable-affiliated programmers on volume discounts or has
discouraged buying groups from filing program access complaints. We note, in this regard, that neither
Section 628 nor the Commission’s rules distinguish between individual MVPDs and buying groups in
describing the justifications for volume discounts.375 Therefore, it is arguably already clear that a buying
group would be compared to an individual MVPD providing the same number of subscribers to the
programmer. Moreover, in the 1993 Program Access Order, the Commission established the conditions
that a buying group must meet “in order to benefit from treatment as a single entity for purposes of
369 See 1993 Program Access Order, 8 FCC Rcd at 3401-02, ¶¶ 98-99 and 3417, ¶ 127; see also 47 C.F.R. §
76.1003(e)(3)(iii).
370 See 47 C.F.R. § 76.1000(j); 1993 Program Access Order, 8 FCC Rcd at 3401-02, ¶ 99; id. at 3417-18, ¶ 127
n.224 (“[T]he analysis of whether another MVPD is similarly situated will involve a consideration of geographic
region (proximity), number of subscribers, date of entry of contract, type of service purchased, and specific terms
related to distinct attributes of the purchasers or secondary transactions involved in the programming sale itself.”).
371 47 C.F.R. § 76.1000(j); see 1993 Program Access Order, 8 FCC Rcd at 3401-02, ¶ 99 and 3417-18, ¶ 127; id. at
3402, ¶ 99 n.161 (“We emphasize that any alternative contract submitted by a defendant programmer must involve a
distributor that uses the same technology as the ‘competing’ distributor identified by the complainant as the recipient
of more favorable treatment. In this manner, we may properly compare the prices charged to each distributor in
order to ensure that the price differential identified by the complainant does not occur as a result of a vendor’s
systematic discrimination against a particular technology relative to cable operators.”).
372 See ACA Comments at 30, Rogerson Report at 18; ACA August 2, 2012 Ex Parte Letter, Attachment at 14; see
also Mediacom Reply Comments at 9-10 (“Mediacom also endorses ACA’s recommendation that the Commission
clarify that . . . the same discounted rates available to an individual MVPD of a certain size must be made available
to members of a buying group that represents a comparable number of subscribers in the aggregate.”).
373 See ACA Comments at 31.
374 Id. at 30.
375 See 47 U.S.C. § 548(c)(2)(B)(iii); 47 C.F.R. § 76.1002(b)(3) & Note (both describing the volume-related
justifications that may be used to establish price differentials); see also 47 C.F.R. § 76.1000(e) (defining “MVPD” to
include “buying groups”).
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subscriber volume.”376 The Commission therein stated that “[v]endors can extend [to buying groups] thesame volume discounts based on number of subscribers that they would ordinarily extend to single
entities of comparable size provided that such discounts are offered in a nondiscriminatory fashion.”377
Thus, to the extent that we adopt the revised definition of “buying group” proposed by ACA,378 we seek
comment on whether it is also necessary to revise the rules to establish an explicit standard of
comparability. Are there differences between individual MVPDs and buying groups that would argue
against the standard of comparability advocated by ACA? As discussed above, the Commission’s
analysis of whether MVPDs are “similarly situated” for purposes of a program access discrimination
complaint extends beyond consideration of whether MVPDs offer roughly the same number of
subscribers to include other factors, such as the geographic region where the MVPDs operate, the services
purchased, and the date of their contracts with the defendant programmer.379 What impact, if any, do
these and other factors have on the standard of comparability advocated by ACA?
98.
Moreover, as discussed above, a complainant MVPD alleging program access
discrimination must make a prima facie showing of a differential in the price, terms, or conditions offered
or charged to the complainant MVPD and to a “competing distributor.”380 In the case of a national buying
group, the comparison is made to a “national competitor.”381 We seek comment on how this requirement
impacts discrimination complaints brought by national buying groups and how, if at all, this requirement
should be modified for discrimination complaints filed by national buying groups. For example, are there
any “national competitors,” other than DBS operators, to which a national buying group can make a
comparison? If only a DBS operator qualifies as a “national competitor,” but a defendant programmer
believes that a DBS operator is not comparable to the national buying group, the defendant programmer
may submit an alternative contract for comparison with another more “similarly situated” alternative
MVPD.382 As discussed above, however, the Commission’s rules provide that the alternative MVPD
“must use the same distribution technology as the ‘competing’ distributor with whom the complainant
seeks to compare itself.”383 If only a DBS operator can qualify as a “competing distributor” for a national
buying group, does this limit the alternative MVPDs that can qualify as “similarly situated” to only other
DBS operators?
99.
ACA further proposes that we make clear that a cable-affiliated programmer cannot
refuse to offer a master agreement to a buying group that specifies a schedule of non-discriminatory
license fees over any range of subscribership levels that the buying group requests, so long as it is
possible that the buying group could provide this number of subscribers from its current members eligible
to participate in the master agreement.384 Under this proposal, a cable-affiliated programmer would
violate Section 628(c)(2)(B)’s prohibition on discriminatory practices if it fails or refuses to offer a non-
discriminatory schedule of prices based on the number of subscribers that members of the buying group
376 See 1993 Program Access Order, 8 FCC Rcd at 3411, ¶ 114.
377 Id.
378 See supra ¶ 87.
379 See supra ¶ 95.
380 See id.
381 See id.
382 See id.
383 47 C.F.R. § 76.1000(j); see supra ¶ 95.
384 See ACA Comments at 32, Rogerson Report at 18.
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could provide if they chose to opt into the master agreement.385 ACA explains that under the currentNCTC model, NCTC negotiates the deal with the programmer and then its members decide whether to
opt into the deal.386 Thus, at the time of negotiation, neither NCTC nor the programmer knows exactly
which NCTC members will take their programming through NCTC — and therefore neither party knows
the precise number of subscribers that NCTC will provide.387 ACA maintains that its proposal “will solve
the ‘chicken and egg’ problem that might occur if certain members of a buying group are unwilling to opt
into a master agreement because license fees are too high, even though the license fees would go down if
the members decided to opt in.”388 We seek comment on the benefits and burdens of ACA’s proposal.
To what extent has the “chicken and egg” problem described above hampered negotiations between
buying groups and programmers? If, at the time of negotiation, neither the buying group nor the
programmer knows precisely which buying group members will participate in the agreement, how are
volume discounts calculated for buying groups? Has past participation been a reliable indicator of which
buying group members are likely to opt into a master agreement? Additionally, we seek comment on
whether the Commission has the authority under Section 628 or some other provision of the Act to
require programmers to provide buying groups generally applicable rate schedules for differing
subscribership levels.389
100.
Finally, we seek comment on ACA’s request that we clarify that the standard of
comparability applies for purposes of evaluating all terms and conditions of the agreement, not just the
price.390 As discussed above,391 to the extent that we adopt the revised definition of “buying group”
proposed by ACA,392 is this proposed clarification necessary? We also invite commenters to analyze the
potential costs and benefits of each of ACA’s proposals relating to the standard of comparability for
buying groups, as well as any alternative proposals, quantify any costs and benefits of the proposals to the
extent possible, and submit appropriate supporting data.
IV.
ORDER ON RECONSIDERATION IN MB DOCKET NO. 07-29
A.
Background
101.For the reasons discussed below, we grant in part and deny in part a Petition for
Reconsideration of the 2007 Extension Order filed by Fox Entertainment Group, Inc. (“Fox”) pertaining
to the Commission’s program access discovery procedures. In the 2007 Extension Order, the
Commission revised these procedures to “ensure that the Commission has the information necessary to
expeditiously resolve program access complaints.”393 The Commission codified its requirement that a
respondent must attach to its answer all documents that it expressly references or relies upon in defending
385 See ACA Comments at 33.
386 See id. at 32.
387 See id.
388 Id., Rogerson Report at 18.
389 See Comcast Reply Comments at 22 (“[R]equiring a rate schedule for varying levels of potential subscribership
is simply not contemplated, and certainly not required, under Section 628(c) or any other portion of the program
access rules — nor should it be. What is at issue here is video programming — not transmission services that must
be tariffed by common carriers.”).
390 See ACA Comments at 33, Rogerson Report at 18.
391 See supra ¶ 97.
392 See supra ¶ 87.
393 2007 Extension Order, 22 FCC Rcd at 17851, ¶ 95.
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a program access claim.394 In addition, the Commission expanded the discovery procedures to permitparty-to-party discovery.395 Under the expanded discovery procedures, parties to a program access
complaint may serve requests for discovery directly on opposing parties and file a copy of the request
with the Commission.396 The respondent has the opportunity to object to any request for documents that
are not in its control or relevant to the dispute, and the obligation to produce the documents is suspended
until the Commission rules on the objection.397 Recognizing that the expanded discovery approach
requires the submission of confidential and competitively sensitive information, the Commission also
revised the standard protective order for use in program access complaint proceedings to ensure that
confidential business information is not improperly used for competitive business purposes.398
Specifically, the Commission modified the language of the protective order to reflect that any counsel or
other persons, including in-house counsel, that are involved in “competitive decision-making” are
prohibited from access to confidential material.399
102.
Fox filed a petition for reconsideration of the 2007 Extension Order, arguing that the
Commission’s decision to permit party-to-party discovery constituted an unexplained departure from
agency policy in contravention of the Administrative Procedure Act.400 AT&T and DISH filed
oppositions to Fox’s petition for reconsideration,401 and Time Warner Inc. filed a reply in support of
Fox’s petition.402
B.
Discussion
103.We reject Fox’s argument that the Commission failed to adequately explain its decision
to permit party-to-party discovery. Fox asserts that the Commission departed without explanation from
the 1998 Program Access Order,403 where the Commission declined to permit party-directed discovery
394 See id. at 17852, ¶ 96.
395 See id. at 17852, ¶¶ 97-98.
396 See id. at 17852, ¶ 98; see also 47 C.F.R. § 76.1003(j). The Commission noted that the existing discovery rules
allow the Commission staff to order production of any documents necessary to the resolution of a program access
complaint and stated that it would retain this process. See 2007 Extension Order, 22 FCC Rcd at 17852, ¶ 97; see
also 47 C.F.R. § 76.7(f).
397 See 2007 Extension Order, 22 FCC Rcd at 17852, ¶ 98; see also 47 C.F.R. § 76.1003(j).
398 See 2007 Extension Order, 22 FCC Rcd at 17854, ¶ 101.
399 See id. at 17854, ¶ 101, and 17894-99, Appendix E. The Commission defined “competitive decision-making” to
include “any activities, association, or relationship with any person, including the complainant, client, or any
authorized representative, that involves rendering advice or participation in any or all of said person’s business
decisions that are or will be made in light of similar or corresponding information about a competitor.” Id. at 17854,
¶ 101, and 17896, Appendix E, ¶ 7(d).
400 See Petition for Reconsideration of Fox Entertainment Group, Inc., MB Docket No. 07-29, filed Nov. 5, 2007, at
2 (“Fox Petition”).
401 See Opposition of AT&T Inc. to Petition for Reconsideration of Fox Entertainment Group, Inc., MB Docket No.
07-29, filed Mar. 6, 2008 (“AT&T Opposition”); Opposition of EchoStar Satellite L.L.C. to Petition for
Reconsideration of Fox Entertainment Group, Inc., MB Docket No. 07-29, filed Mar. 6, 2008 (“DISH Opposition”).
402 See Reply of Time Warner Inc. in Support of Petition for Reconsideration of Fox Entertainment Group, Inc., MB
Docket No. 07-29, filed Mar. 17, 2008 (“Time Warner Reply”).
403 See Implementation of the Cable Television Consumer Protection and Competition Act of 1992; Petition for
Rulemaking of Ameritech New Media, Inc. Regarding Development of Competition and Diversity in Video
Programming Distribution and Carriage, Report and Order, 13 FCC Rcd 15822 (1998) (“1998 Program Access
Order”).
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out of concern that it could result in disputes over the production of documents and lengthen resolutiontimes for program access complaints.404 We disagree. The Commission carefully weighed commenters’
arguments in support of and in opposition to expanded discovery405 and concluded that “expanded
discovery will improve the quality and efficiency of the Commission’s resolution of program access
complaints.”406 In this regard, a number of non-incumbent MVPDs raised concerns that documents
necessary for complainants to establish discrimination, including programmers’ carriage contracts, are not
made available in complaint proceedings.407 The Commission agreed with these commenters “that the
availability of programmers’ carriage contracts, subject to confidential treatment, [is] essential for
determining whether the programmer is discriminating in price, terms and conditions.”408 The
Commission thus found that “it would be unreasonable for a respondent not to produce all the documents
requested by the complainant or ordered by the Commission, provided that such documents are in its
control and relevant to the dispute.”409 As DISH notes in its opposition, the record in this proceeding
reflected ongoing concerns from MVPDs about the availability of relevant documents.410 Moreover,
DISH states that the Commission also had “an additional ten years of experience with the program access
complaint process and discovery rules from which to determine that the existing discovery rules were
insufficient.”411 Accordingly, the Commission reasonably concluded that party-directed discovery will
facilitate the expeditious resolution of program access complaints by ensuring that all relevant documents
are available to Commission staff and the parties, without the need for the Commission to take action to
order the production of such documents. The modifications to the discovery rules were thus appropriate
and adequately supported.
104.
Contrary to Fox’s arguments, the Commission also considered concerns raised by
commenters that party-controlled discovery could give rise to overly broad discovery requests and
“fishing expeditions” for confidential and competitively-sensitive information, which could lead to
disputes over discovery and prolong resolution of program access complaints.412 The Commission
adopted several safeguards to address these concerns. For example, the Commission determined that
parties should have the opportunity to object to any request for documents that are not in their control or
relevant to the dispute and that the obligation to produce the documents would be suspended until the
Commission rules on the objection.413 Moreover, the Commission modified the standard protective order
to further limit the individuals who may access competitively sensitive documents, thereby ensuring that
confidential business information is not improperly used for competitive business purposes.414 The
Commission emphasized that it has full authority to impose sanctions for violations of its protective
orders, including but not limited to suspension or disbarment of attorneys from practice before the
Commission, forfeitures, cease and desist orders, and denial of further access to confidential information
404 See Fox Petition at 2-3 (citing 1998 Program Access Order, 13 FCC Rcd at 15829, ¶ 54).
405 See 2007 Extension Order, 22 FCC Rcd at 17850-51, ¶¶ 92-94.
406 Id. at 17852, ¶ 97.
407 See id. at 17850-51, ¶¶ 85, 92-93.
408 Id. at 17852, ¶ 97.
409 Id. (footnote omitted).
410 See DISH Opposition at 3.
411 Id.
412 See 2007 Extension Order, 22 FCC Rcd at 17851, ¶ 94.
413 See id. at 17852, ¶ 98.
414 See id. at 17854, ¶ 101.
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in Commission proceedings.415 Further, the Commission cautioned that it intends to vigorously enforceany transgressions of the provisions of its protective orders.416
105.
We are unpersuaded by Fox’s assertion that, notwithstanding these safeguards, expanded
discovery “is virtually certain to lengthen significantly the time it takes for the Commission to resolve
program access complaints” because the Commission will have to address each disputed discovery
demand.417 Because each party to a program access dispute must respond to discovery requests from the
other party, the parties have mutual incentives to avoid overbroad requests and to come to an agreement
on the scope of discovery. Indeed, in program access complaint proceedings that have gone to discovery
since the expanded discovery rules have been in effect, the parties have generally settled discovery
disputes without Commission intervention and, to the extent that they have been unable to resolve
discrete issues on their own, the Commission has quickly resolved these issues.418
106.
Fox also argues that the expanded discovery process fails to adequately protect highly
confidential and competitively sensitive documents and urges the Commission, if it continues to allow
party-directed discovery, to revise the standard protective order to provide more stringent protection of
highly confidential information.419 Fox acknowledges that the Commission revised the standard
protective order to prohibit access to confidential information to individuals who are involved in
competitive decision-making, but asserts that there is currently no mechanism for ensuring compliance
with this requirement in advance.420 According to Fox, any ex post facto sanction imposed by the
Commission for violating a protective order could likely never mitigate the damage to a programmer’s
business if confidential information falls into the hands of a competitor.421 Fox argues that the
Commission should therefore revise the protective order to permit parties to object if they have concerns
about the individuals who seek access to confidential information.422 Under Fox’s proposal, an individual
seeking access to confidential information would be required to provide at least five business days’ notice
to a programmer prior to accessing any protected documents to give the programmer the opportunity to
object.423 If there is an objection, access would not be provided until the Commission rules on the
objection.424 Fox also asserts that the Commission should revise the standard protective order to permit
parties to limit access to certain highly confidential information to outside counsel,425 and to provide
parties the right to prohibit copying of highly sensitive documents.426
415 See id. at 17855, ¶ 103; see 47 C.F.R. § 76.1003(k).
416 See 2007 Extension Order, 22 FCC Rcd at 17855, ¶ 103.
417 Fox Petition at 5; see also Time Warner Reply at 6.
418 See, e.g., AT&T v. MSG/Cablevision (Bureau Order), 26 FCC Rcd at 13213-14, ¶ 9; Verizon v. MSG/Cablevision
(Bureau Order), 26 FCC Rcd at 13152-53, ¶ 9.
419 See Fox Petition at 6; see also Time Warner Reply at 5.
420 See Fox Petition at 8.
421 See id.
422 See id. Fox states that protective orders used in the context of transfer of control and assignment of license
reviews include such a right to object. See id. at 9.
423 See id. at 8.
424 See id.
425 See id. at 9 n.28.
426 See id. at 10 n.29.
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107.We modify the standard protective order as requested by Fox to include a right to object
provision.427 We note that parties are free to negotiate their own protective orders to include a right to
object provision and any other protections they deem necessary,428 and have done so successfully in
program access complaint proceedings that have been initiated since the 2007 Extension Order.429
Nevertheless, a right to object provision is commonly included in protective orders, and we agree that
adding a right to object provision to the standard protective order will further ensure that confidential
information is not improperly used for competitive business purposes. Thus, under the revised standard
protective order, an individual seeking access to confidential information will be required to provide at
least five business days’ notice to the submitting party prior to accessing any protected documents to
provide the submitting party the opportunity to object. If the submitting party objects, the individual will
not be provided access to the protected documents until the Commission rules on the objection. We
decline, however, to modify the standard protective order at this time to permit parties to limit access to
certain “highly confidential” information to outside counsel only. Whether certain categories of
confidential information require an enhanced level of protection, and therefore should be restricted to
outside counsel, depends on the facts presented in an individual adjudication.430 Moreover, because
protective orders commonly restrict copying of only a subset of “highly confidential” documents that are
particularly sensitive,431 we also decline to modify the standard protective order to provide parties the
right to prohibit copying of certain documents. Rather, as with the issue of whether certain categories of
confidential information require an enhanced level of protection, the issue of whether to preclude copying
of certain documents depends on the facts presented in an individual adjudication.
427 See Appendix I, Standard Protective Order and Declaration for Use in Section 628 Program Access Proceedings.
428 See Revision of the Commission’s Program Carriage Rules, Leased Commercial Access; Development of
Competition and Diversity in Video Programming Distribution and Carriage, Second Report and Order in MB
Docket No. 07-42 and Notice of Proposed Rulemaking in MB Docket No. 11-131, 26 FCC Rcd 11494, 11528, ¶ 48
(2011).
429 See Sky Angel U.S., LLC v. Discovery Communications, LLC et al, Order, 27 FCC Rcd 4221, 4221, ¶ 2, and
4225, Protective Order ¶ 9 (MB 2012) (“Sky Angel v. Discovery”); Lafayette Utilities System v. National Cable
Television Cooperative, Inc. et al, Order, 26 FCC Rcd 10274, 10276, ¶ 6, and 10281, Protective Order ¶ 8 (MB
2011); DISH Network L.L.C. v. Madison Square Garden, Inc. and Madison Square Garden L.P. and Cablevision
Systems Corp., Order, 25 FCC Rcd 15227, 15227-8, ¶ 2, and 15232, Protective Order ¶ 9 (MB 2010) (“DISH v.
MSG”); Verizon Telephone Companies and Verizon Services Corp. v. Madison Square Garden, L.P. and
Cablevision Systems Corp., Order, 25 FCC Rcd 3888, 3888, ¶ 2, and 3893, Protective Order ¶ 9 (MB 2010)
(“Verizon v. MSG”); WaveDivision Holdings, LLC, Horizon Cable TV, Inc., Stanford University, and the City of San
Bruno, California v. Comcast Corp. et al, Order, 25 FCC Rcd 2231, 2232, ¶ 2, and 2238, Protective Order ¶ 7 (MB
2010) (“Wave v. Comcast”); AT&T Services, Inc. and AT&T Connecticut v. Madison Square Garden, L.P. and
Cablevision Systems Corp., Order, 24 FCC Rcd 11258, 11258, ¶ 2, and 11264, Protective Order ¶ 8 (MB 2009)
(“AT&T v. MSG”); AT&T Services, Inc. and AT&T California v. Cox Enterprises, Inc. and Cox Communications,
Inc., Order, 23 FCC Rcd 14176, 14176, ¶ 2, and 14182, Protective Order ¶ 8 (MB 2008) (all including a right to
object provision in the protective order) (“AT&T v. Cox”).
430 We note that parties in program access complaint proceedings that have been initiated since the 2007 Extension
Order have taken differing approaches in restricting access to confidential information to outside counsel. Compare
Sky Angel v. Discovery, 27 FCC Rcd 4221, Protective Order ¶ 2f, and DISH v. MSG, 25 FCC Rcd at 15231,
Protective Order ¶ 2f (each providing that certain confidential information may be designated as “Outside Counsel’s
Eyes Only”) with Verizon v. MSG, 25 FCC Rcd at 3892, Protective Order ¶ 6, Wave v. Comcast, 25 FCC Rcd at
2237, Protective Order ¶ 4, AT&T v. MSG, 24 FCC Rcd at 11263, Protective Order ¶ 5, and AT&T v. Cox, 23 FCC
Rcd at 14185, Protective Order ¶ 5 (each restricting access to all confidential information to outside counsel).
431 See, e.g., Verizon v. MSG, 25 FCC Rcd at 3893, Protective Order ¶ 8; Wave v. Comcast, 25 FCC Rcd at 2237-38,
Protective Order ¶ 6; AT&T v. MSG, 24 FCC Rcd at 11264, Protective Order ¶ 7; AT&T v. Cox, 23 FCC Rcd at
14182, Protective Order ¶ 7.
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108.Fox further argues that the Commission should expand the rights of a discovery target to
object to the scope of a request for documents.432 Fox states that the 2007 Extension Order provides that
recipients of a discovery request may object “to any request for documents that are not in its control or
relevant to the dispute,”433 and asserts that this narrow basis for an objection would preclude opposing a
demand for materials that are subject to the attorney-client or attorney work product privileges or that
represent confidential exchanges between programmers and their accountants or experts.434 We clarify
that the language referenced by Fox, which is codified in Section 76.1003(j) of the Commission’s rules,435
was not intended to preclude the right to assert the attorney-client privilege or the attorney work product
privilege for materials subject to a discovery request in a program access complaint proceeding. We
amend this rule to reflect this clarification. The work product privilege may also extend to confidential
exchanges between programmers and their accountants or experts if these materials are prepared in
anticipation of litigation.436 We note that the adjudicator in a program access complaint proceeding may
order the production of documents for which a privilege is asserted for in camera inspection to determine
whether the attorney-client or work product privileges apply.
109.
Finally, Fox asserts that the Commission should consider imposing sanctions against
program access complainants that make frivolous discovery requests for information that is clearly not
relevant or that is outside the scope of the complaint proceeding. As discussed above, we think it is
unlikely that parties will use discovery to engage in “fishing expeditions.” We will, however, take
appropriate action if we find that any party to a program access complaint proceeding is abusing the
discovery process.
V.
PROCEDURAL MATTERS
A.
Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192 and Order on
Reconsideration in MB Docket No. 07-29
Final Regulatory Flexibility Act Analysis
110.As required by the Regulatory Flexibility Act of 1980 (“RFA”),437 the Commission has
prepared a Final Regulatory Flexibility Analysis (“FRFA”) relating to this Report and Order in MB
Docket No. 12-68 et al. and Order on Reconsideration in MB Docket No. 07-29. The FRFA is set forth
in Appendix J.
2.
Final Paperwork Reduction Act of 1995 Analysis
111.This Report and Order in MB Docket No. 12-68 et al. and Order on Reconsideration in
MB Docket No. 07-29 has been analyzed with respect to the Paperwork Reduction Act of 1995
(“PRA”),438 and does not contain any new or modified information collection requirements. In addition,
therefore, it does not contain any new or modified “information collection burden for small business
432 See Fox Petition at 10.
433 2007 Extension Order, 22 FCC Rcd at 17852, ¶ 98; see 47 C.F.R. § 76.1003(j).
434 See Fox Petition at 10; see also Time Warner Reply at 7.
435 See 47 C.F.R. § 76.1003(j).
436 See United States v. Nobles, 425 U.S. 225, 238-39 (1975) (attorney work product extends to material prepared by
an attorney’s agents).
437 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. § 601 et. seq., has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, Title II, 110 Stat. 847 (1996). The SBREFA
was enacted as Title II of the Contract With America Advancement Act of 1996 (“CWAAA”).
438 The Paperwork Reduction Act of 1995 (“PRA”), Pub. L. No. 104-13, 109 Stat 163 (1995) (codified in Chapter 35
of title 44 U.S.C.).
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concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of2002.439
3.
Congressional Review Act
112.The Commission will send a copy of this Report and Order in MB Docket No. 12-68 et
al. and Order on Reconsideration in MB Docket No. 07-29 in a report to be sent to Congress and the
Government Accountability Office, pursuant to the Congressional Review Act.440
B.
FNPRM in MB Docket No. 12-68
1.Initial Regulatory Flexibility Act Analysis
113.As required by the RFA,441 the Commission has prepared an Initial Regulatory Flexibility
Analysis (“IRFA”) relating to the FNPRM in MB Docket No. 12-68. The IRFA is attached to this
FNPRM as Appendix K.
2.
Paperwork Reduction Act
114.The FNPRM in MB Docket No. 12-68 does not contain proposed information collections
subject to the PRA.442 In addition, therefore, it does not contain any new or modified information
collection burden for small business concerns with fewer than 25 employees, pursuant to the Small
Business Paperwork Relief Act of 2002.443
3.
Ex Parte Rules
115.Permit-But-Disclose. The proceeding the FNPRM in MB Docket No. 12-68 initiates
shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission’s ex parte
rules.444 Persons making ex parte presentations must file a copy of any written presentation or a
memorandum summarizing any oral presentation within two business days after the presentation (unless a
different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations
are reminded that memoranda summarizing the presentation must (1) list all persons attending or
otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all
data presented and arguments made during the presentation. If the presentation consisted in whole or in
part of the presentation of data or arguments already reflected in the presenter’s written comments,
memoranda or other filings in the proceeding, the presenter may provide citations to such data or
arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or
paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to
be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings
governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing,
written ex parte presentations and memoranda summarizing oral ex parte presentations, and all
attachments thereto, must be filed through the electronic comment filing system available for that
proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in
this proceeding should familiarize themselves with the Commission’s ex parte rules.
439 The Small Business Paperwork Relief Act of 2002 (“SBPRA”), Pub. L. No. 107-198, 116 Stat 729 (2002)
(codified in Chapter 35 of title 44 U.S.C.); see 44 U.S.C. 3506(c)(4).
440 See 5 U.S.C. § 801(a)(1)(A).
441 See 5 U.S.C. § 603.
442 Pub. L. No. 104-13.
443 Pub. L. No. 107-198. See 44 U.S.C. § 3506(c)(4).
444 47 C.F.R. §§ 1.1200 et seq.
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4.Filing Requirements
116.Comments and Replies. Pursuant to Sections 1.415 and 1.419 of the Commission’s
rules,445 interested parties may file comments and reply comments on or before the dates indicated on the
first page of this document. Comments may be filed using the Commission’s Electronic Comment Filing
System (“ECFS”).446
·
Electronic Filers: Comments may be filed electronically using the Internet by accessing the
ECFS: http://fjallfoss.fcc.gov/ecfs2/.
·
Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. If more than one docket or rulemaking number appears in the caption of this
proceeding, filers must submit two additional copies for each additional docket or rulemaking
number.
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by
first-class or overnight U.S. Postal Service mail. All filings must be addressed to the
Commission’s Secretary, Office of the Secretary, Federal Communications Commission.
o All hand-delivered or messenger-delivered paper filings for the Commission’s
Secretary must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-
A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand
deliveries must be held together with rubber bands or fasteners. Any envelopes and
boxes must be disposed of before entering the building.
o Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
o U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445
12th Street, SW, Washington DC 20554.
117.
Availability of Documents. Comments, reply comments, and ex parte submissions will
be available for public inspection during regular business hours in the FCC Reference Center, Federal
Communications Commission, 445 12th Street, S.W., CY-A257, Washington, D.C., 20554. These
documents will also be available via ECFS. Documents will be available electronically in ASCII,
Microsoft Word, and/or Adobe Acrobat.
118.
People with Disabilities. To request materials in accessible formats for people with
disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call
the FCC’s Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432
(TTY).
119.
Additional Information. For additional information on this proceeding, contact David
Konczal, David.Konczal@fcc.gov, or Kathy Berthot, Kathy.Berthot@fcc.gov, of the Media Bureau,
Policy Division, (202) 418-2120.
VI.
ORDERING CLAUSES
A.
Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192 and Order on
Reconsideration in MB Docket No. 07-29
IT IS ORDERED
that, pursuant to the authority found in Sections 4(i), 4(j), 303(r), and628 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), and 548, the
445 See id. §§ 1.415, 1.419.
446 See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
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Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192 and Order on Reconsideration in MBDocket No. 07-29
IS ADOPTED
.121.
IT IS FURTHER ORDERED
that, pursuant to the authority found in Sections 4(i), 4(j),303(r), and 628 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), and
548, the Commission’s rules
ARE HEREBY AMENDED
as set forth in Appendix C.122.
IT IS FURTHER ORDERED
that the rules adopted hereinWILL BECOME
EFFECTIVE
30 days after the date of publication in the Federal Register.123.
IT IS FURTHER ORDERED
that, pursuant to sections 4(i), 4(j), 309, and 310(d) of theCommunications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 309, and 310(d), the conditions
previously adopted in the Liberty Media Order
ARE HEREBY MODIFIED
as set forth in paragraph 72of the Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192 effective 30 days after the date of
publication in the Federal Register.
124.
IT IS FURTHER ORDERED
that, pursuant to the authority contained in section 405 ofthe Communications Act of 1934, as amended, 47 U.S.C. § 405, and section 1.429 of the Commission’s
rules, 47 C.F.R. § 1.429, the Petition for Reconsideration of Fox Entertainment Group, Inc. in MB Docket
No. 07-29
IS GRANTED in part and DENIED in part
as described herein.125.
IT IS FURTHER ORDERED
that the Commission’s Consumer and GovernmentalAffairs Bureau, Reference Information Center,
SHALL SEND
a copy of this Report and Order in MBDocket Nos. 12-68, 07-18, and 05-192 and Order on Reconsideration in MB Docket No. 07-29, including
the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
126.
IT IS FURTHER ORDERED
that the CommissionSHALL SEND
a copy of thisReport and Order in MB Docket Nos. 12-68, 07-18, and 05-192 and Order on Reconsideration in MB
Docket No. 07-29 in a report to be sent to Congress and the Government Accountability Office pursuant
to the Congressional Review Act, see 5 U.S.C. § 801(a)(1)(A).
B.
FNPRM in MB Docket No. 12-68
127.IT IS ORDERED
that, pursuant to the authority found in Sections 4(i), 4(j), 303(r), and628 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), and 548, the
Further Notice of Proposed Rulemaking in MB Docket No. 12-68
IS ADOPTED
.128.
IT IS FURTHER ORDERED
that the Commission’s Consumer and GovernmentalAffairs Bureau, Reference Information Center,
SHALL SEND
a copy of the Further Notice of ProposedRulemaking in MB Docket No. 12-68, including the Initial Regulatory Flexibility Analysis, to the Chief
Counsel for Advocacy of the Small Business Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A
List of Commenters in MB Docket Nos. 12-68, 07-18, and 05-192
Comments:
American Cable AssociationAT&T Inc.
Blooston Rural Video Service Providers
Cablevision Systems Corp.
CenturyLink, Inc.
Comcast Corporation and NBCUniversal Media, LLC
Cox Communications, Inc.
DIRECTV, LLC
Discovery Communications, LLC
DISH Network L.L.C.
Free Press
Independent Telephone & Telecommunications Alliance
Interstate Communications, OmniTel Communications, Communications 1 Network, Inc., Farmers
Mutual Telephone Coop of Shellsburg, Huxley Communications Cooperative, Hospers
Telephone Company, Premier Communications, and Marne & Elk Horn Telephone Company
The Madison Square Garden Company
Mediacom Communications Corporation
National Cable & Telecommunications Association
Organization for the Promotion and Advancement of Small Telecommunications Companies and the
National Telecommunications Cooperative Association
Time Warner Cable Inc.
United States Telecom Association
Verizon
Writers Guild of America, West, Inc.
Reply Comments:
American Cable AssociationAmerican Public Power Association
AT&T Inc.
Charter Communications Inc.
Comcast Corporation and NBCUniversal Media, LLC
Cox Communications, Inc.
DIRECTV, LLC
DISH Network L.L.C.
The Madison Square Garden Company
Mediacom Communications Corporation
National Cable & Telecommunications Association
Organization for the Promotion and Advancement of Small Telecommunications Companies and the
National Telecommunications Cooperative Association
Time Warner Cable Inc.
Time Warner Inc.
Verizon
Walt Disney Company, Viacom, Inc., News Corporation, Time Warner Inc., and CBS Corporation
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APPENDIX B
List of Parties in MB Docket No. 07-29
Petitioner:
Fox Entertainment Group, Inc.Oppositions:
AT&T Inc.EchoStar Satellite L.L.C.
Replies:
Time Warner Inc.74
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APPENDIX C
Final RulesFor the reasons discussed in the preamble, Part 76 of Title 47 of the Code of Federal Regulations is
amended as follows:
PART 76 — MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
1.
The authority citation for Part 76 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325,
339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556,
558, 560, 561, 571, 572 and 573.
2.
Section 76.1002 is amended by revising paragraphs (c)(2), (c)(3), (c)(4), and (c)(5), and removing
paragraph (c)(6) to read as follows:
§ 76.1002 Specific unfair practices prohibited.
* * * * *
(c) Exclusive contracts and practices--
(1) * * *
(2) [Reserved]
(3) Specific arrangements: Subdistribution agreements--
(i) Unserved areas. No cable operator shall enter into any subdistribution agreement or arrangement for
satellite cable programming or satellite broadcast programming with a satellite cable programming vendor
in which a cable operator has an attributable interest or a satellite broadcast programming vendor in which
a cable operator has an attributable interest for distribution to persons in areas not served by a cable
operator as of October 5, 1992 unless such agreement or arrangement complies with the limitations set
forth in paragraph (c)(3)(ii) of this section.
(ii) Limitations on subdistribution agreements in unserved areas. No cable operator engaged in
subdistribution of satellite cable programming or satellite broadcast programming may require a
competing multichannel video programming distributor to
* * * * *
(4) Public interest determination. In determining whether an exclusive contract is in the public interest for
purposes of paragraph (c)(5) of this section, the Commission will consider each of the following factors
with respect to the effect of such contract on the distribution of video programming in areas that are
served by a cable operator:
* * * * *
(5) Commission approval required. Any cable operator, satellite cable programming vendor in which a
cable operator has an attributable interest, or satellite broadcast programming vendor in which a cable
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operator has an attributable interest must submit a “Petition for Exclusivity” to the Commission andreceive approval from the Commission to preclude the filing of complaints alleging that an exclusive
contract with respect to areas served by a cable operator violates section 628(c)(2)(B) of the
Communications Act of 1934, as amended, and paragraph (b) of this section.
(i) The petition for exclusivity shall contain those portions of the contract relevant to exclusivity,
including:
(A) A description of the programming service;
(B) The extent and duration of exclusivity proposed; and
(C) Any other terms or provisions directly related to exclusivity or to any of the criteria set forth in
paragraph (c)(4) of this section. The petition for exclusivity shall also include a statement setting forth the
petitioner’s reasons to support a finding that the contract is in the public interest, addressing each of the
five factors set forth in paragraph (c)(4) of this section.
(ii) Any competing multichannel video programming distributor affected by the proposed exclusivity may
file an opposition to the petition for exclusivity within thirty (30) days of the date on which the petition is
placed on public notice, setting forth its reasons to support a finding that the contract is not in the public
interest under the criteria set forth in paragraph (c)(4) of this section. Any such formal opposition must be
served on petitioner on the same day on which it is filed with the Commission.
(iii) The petitioner may file a response within ten (10) days of receipt of any formal opposition. The
Commission will then approve or deny the petition for exclusivity.
3.
Section 76.1003 is amended by revising paragraphs (e) and (j) and adding new paragraph (m) to
read as follows:
§ 76.1003 Program access proceedings.
* * * * *
(e) Answer.
(1) Except as otherwise provided or directed by the Commission, any cable operator, satellite cable
programming vendor or satellite broadcast programming vendor upon which a program access complaint
is served under this section shall answer within twenty (20) days of service of the complaint, provided
that the answer shall be filed within forty-five (45) days of service of the complaint if the complaint
alleges a violation of section 628(b) of the Communications Act of 1934, as amended, or § 76.1001(a) of
this part. To the extent that a cable operator, satellite cable programming vendor or satellite broadcast
programming vendor expressly references and relies upon a document or documents in asserting a
defense or responding to a material allegation, such document or documents shall be included as part of
the answer.
* * * * *
(j) Discovery. In addition to the general pleading and discovery rules contained in § 76.7 of this part,
parties to a program access complaint may serve requests for discovery directly on opposing parties, and
file a copy of the request with the Commission. The respondent shall have the opportunity to object to any
request for documents that are not in its control or relevant to the dispute or protected from disclosure by
the attorney-client privilege, the work-product doctrine, or other recognized protections from disclosure.
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Such request shall be heard, and determination made, by the Commission. Until the objection is ruledupon, the obligation to produce the disputed material is suspended. Any party who fails to timely provide
discovery requested by the opposing party to which it has not raised an objection as described above, or
who fails to respond to a Commission order for discovery material, may be deemed in default and an
order may be entered in accordance with the allegations contained in the complaint, or the complaint may
be dismissed with prejudice.
* * * * *
(m) Deadline for Media Bureau Action on Complaints Alleging a Denial of Programming. For
complaints alleging a denial of programming, the Chief, Media Bureau shall release a decision resolving
the complaint within six (6) months from the date the complaint is filed.
4.
Section 76.1004 is amended by revising paragraph (b) to read as follows:
§ 76.1004 Applicability of program access rules to common carriers and affiliates.
* * * * *
(b) Sections 76.1002(c)(1) through (3) shall be applied to a common carrier or its affiliate that provides
video programming by any means directly to subscribers as follows: No common carrier or its affiliate
that provides video programming directly to subscribers shall engage in any practice or activity or enter
into any understanding or arrangement, including exclusive contracts, with a satellite cable programming
vendor or satellite broadcast programming vendor for satellite cable programming or satellite broadcast
programming that prevents a multichannel video programming distributor from obtaining such
programming from any satellite cable programming vendor in which a common carrier or its affiliate has
an attributable interest, or any satellite broadcasting vendor in which a common carrier or its affiliate has
an attributable interest for distribution to persons in areas not served by a cable operator as of October 5,
1992.
5.
Section 76.1507 is amended by revising paragraphs (a) and (b) to read as follows:
§ 76.1507 Competitive access to satellite cable programming
(a) * * *
(1) * * *
(2) [Reserved]
(3) Section 76.1002(c)(3)(i) through (ii) shall only restrict the conduct of an open video system operator,
its affiliate that provides video programming on its open video system and a satellite cable programming
vendor in which an open video system operator has an attributable interest, as follows: No open video
system operator shall enter into any subdistribution agreement or arrangement for satellite cable
programming or satellite broadcast programming with a satellite cable programming vendor in which an
open video system operator has an attributable interest or a satellite broadcast programming vendor in
which an open video system operator has an attributable interest for distribution to persons in areas not
served by a cable operator as of October 5, 1992 unless such agreement or arrangement complies with the
limitations set forth in § 76.1002(c)(3)(ii) of this part.
(b) No open video system programming provider in which a cable operator has an attributable interest
shall engage in any practice or activity or enter into any understanding or arrangement, including
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exclusive contracts, with a satellite cable programming vendor or satellite broadcast programming vendorfor satellite cable programming or satellite broadcast programming that prevents a multichannel video
programming distributor from obtaining such programming from any satellite cable programming vendor
in which a cable operator has an attributable interest, or any satellite broadcasting vendor in which a cable
operator has an attributable interest for distribution to person in areas not served by a cable operator as of
October 5, 1992.
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APPENDIX D
Restated Final Rules Showing Changes Adopted
PART 76 — MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE1.
The authority citation for Part 76 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325,
339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556,
558, 560, 561, 571, 572 and 573.
2.
Section 76.1002 is amended by revising paragraph (c) to read as follows:
§ 76.1002 Specific unfair practices prohibited.
* * * * *
(c) Exclusive contracts and practices--
(1) Unserved areas. No cable operator shall engage in any practice or activity or enter into any
understanding or arrangement, including exclusive contracts, with a satellite cable programming vendor
or satellite broadcast programming vendor for satellite cable programming or satellite broadcast
programming that prevents a multichannel video programming distributor from obtaining such
programming from any satellite cable programming vendor in which a cable operator has an attributable
interest, or any satellite broadcast programming vendor in which a cable operator has an attributable
interest for distribution to persons in areas not served by a cable operator as of October 5, 1992.
(2) [Reserved] Served areas. No cable operator shall enter into any exclusive contracts, or engage in any
practice, activity or arrangement tantamount to an exclusive contract, for satellite cable programming or
satellite broadcast programming with a satellite cable programming vendor in which a cable operator has
an attributable interest or a satellite broadcast programming vendor in which a cable operator has an
attributable interest, with respect to areas served by a cable operator, unless the Commission determines
in accordance with paragraph (c)(4) of this section that such contract, practice, activity or arrangement is
in the public interest.
(3) Specific arrangements: Subdistribution agreements--
(i) Served
Unserved
areas. No cable operator shall enter into any subdistribution agreement orarrangement for satellite cable programming or satellite broadcast programming with a satellite cable
programming vendor in which a cable operator has an attributable interest or a satellite broadcast
programming vendor in which a cable operator has an attributable interest for distribution to persons in
areas not served by a cable operator as of October 5, 1992, with respect to areas served by a cable
operator, unless such agreement or arrangement complies with the limitations set forth in paragraph
(c)(3)(ii)(iii) of this section.
(ii) Limitations on subdistribution agreements in servedunserved areas. No cable operator engaged in
subdistribution of satellite cable programming or satellite broadcast programming may require a
competing multichannel video programming distributor to
(A) Purchase additional or unrelated programming as a condition of such subdistribution; or
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(B) Provide access to private property in exchange for access to programming. In addition, asubdistributor may not charge a competing multichannel video programming distributor more for said
programming than the satellite cable programming vendor or satellite broadcast programming vendor
itself would be permitted to charge. Any cable operator acting as a subdistributor of satellite cable
programming or satellite broadcast programming must respond to a request for access to such
programming by a competing multichannel video programming distributor within fifteen (15) days of the
request. If the request is denied, the competing multichannel video programming distributor must be
permitted to negotiate directly with the satellite cable programming vendor or satellite broadcast
programming vendor.
(4) Public interest determination. In determining whether an exclusive contract is in the public interest for
purposes of paragraph (c)(52) of this section, the Commission will consider each of the following factors
with respect to the effect of such contract on the distribution of video programming in areas that are
served by a cable operator:
(i) The effect of such exclusive contract on the development of competition in local and national
multichannel video programming distribution markets;
(ii) The effect of such exclusive contract on competition from multichannel video programming
distribution technologies other than cable;
(iii) The effect of such exclusive contract on the attraction of capital investment in the production and
distribution of new satellite cable programming;
(iv) The effect of such exclusive contract on diversity of programming in the multichannel video
programming distribution market; and
(v) The duration of the exclusive contract.
(5) Prior Commission approval required. Any cable operator, satellite cable programming vendor in
which a cable operator has an attributable interest, or satellite broadcast programming vendor in which a
cable operator has an attributable interest seeking to enforce or enter into an exclusive contract in an area
served by a cable operator must submit a “Petition for Exclusivity” to the Commission for approvaland
receive approval from the Commission to preclude the filing of complaints alleging that an
exclusive contract with respect to areas served by a cable operator violates section 628(c)(2)(B) of
the Communications Act of 1934, as amended, and paragraph (b) of this section.
(i) The petition for exclusivity shall contain those portions of the contract relevant to exclusivity,
including:
(A) A description of the programming service;
(B) The extent and duration of exclusivity proposed; and
(C) Any other terms or provisions directly related to exclusivity or to any of the criteria set forth in
paragraph (c)(4) of this section. The petition for exclusivity shall also include a statement setting forth the
petitioner’s reasons to support a finding that the contract is in the public interest, addressing each of the
five factors set forth in paragraph (c)(4) of this section.
(ii) Any competing multichannel video programming distributor affected by the proposed exclusivity may
file an opposition to the petition for exclusivity within thirty (30) days of the date on which the petition is
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placed on public notice, setting forth its reasons to support a finding that the contract is not in the publicinterest under the criteria set forth in paragraph (c)(4) of this section. Any such formal opposition must be
served on petitioner on the same day on which it is filed with the Commission.
(iii) The petitioner may file a response within ten (10) days of receipt of any formal opposition. The
Commission will then approve or deny the petition for exclusivity.
(6) Sunset provision. The prohibition of exclusive contracts set forth in paragraph (c)(2) of this section
shall cease to be effective on October 5, 2012, unless the Commission finds, during a proceeding to be
conducted during the year preceding such date, that said prohibition continues to be necessary to preserve
and protect competition and diversity in the distribution of video programming.
* * * * *
3.
Section 76.1003 is amended by revising paragraphs (e) and (j) and adding new paragraph (m) to
read as follows:
§ 76.1003 Program access proceedings.
* * * * *
(e) Answer.
(1) Except as otherwise provided or directed by the Commission, any cable operator, satellite cable
programming vendor or satellite broadcast programming vendor upon which a program access complaint
is served under this section shall answer within twenty (20) days of service of the complaint, provided
that the answer shall be filed within forty-five (45) days of service of the complaint if the complaint
alleges a violation of section 628(b) of the Communications Act of 1934, as amended, or § 76.1001(a)
of this part. To the extent that a cable operator, satellite cable programming vendor or satellite broadcast
programming vendor expressly references and relies upon a document or documents in asserting a
defense or responding to a material allegation, such document or documents shall be included as part of
the answer.
* * * * *
(j) Discovery. In addition to the general pleading and discovery rules contained in § 76.7 of this part,
parties to a program access complaint may serve requests for discovery directly on opposing parties, and
file a copy of the request with the Commission. The respondent shall have the opportunity to object to any
request for documents that are not in its control or relevant to the dispute or protected from disclosure
by the attorney-client privilege, the work-product doctrine, or other recognized protections from
disclosure. Such request shall be heard, and determination made, by the Commission. Until the objection
is ruled upon, the obligation to produce the disputed material is suspended. Any party who fails to timely
provide discovery requested by the opposing party to which it has not raised an objection as described
above, or who fails to respond to a Commission order for discovery material, may be deemed in default
and an order may be entered in accordance with the allegations contained in the complaint, or the
complaint may be dismissed with prejudice.
* * * * *
(m) Deadline for Media Bureau Action on Complaints Alleging a Denial of Programming. For
complaints alleging a denial of programming, the Chief, Media Bureau shall release a decision
resolving the complaint within six (6) months from the date the complaint is filed.
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4.Section 76.1004 is amended by revising paragraph (b) to read as follows:
§ 76.1004 Applicability of program access rules to common carriers and affiliates.
(a) Any provision that applies to a cable operator under §§ 76.1000 through 76.1003 shall also apply to a
common carrier or its affiliate that provides video programming by any means directly to subscribers.
Any such provision that applies to a satellite cable programming vendor in which a cable operator has an
attributable interest shall apply to any satellite cable programming vendor in which such common carrier
has an attributable interest. For the purposes of this section, two or fewer common officers or directors
shall not by itself establish an attributable interest by a common carrier in a satellite cable programming
vendor (or its parent company) or a terrestrial cable programming vendor (or its parent company).
(b) Sections 76.1002(c)(1) through (3) shall be applied to a common carrier or its affiliate that provides
video programming by any means directly to subscribers in such a way as follows: No common carrier
or its affiliate that provides video programming directly to subscribers shall engage in any practice
or activity or enter into any understanding or arrangement, including exclusive contracts, with a
satellite cable programming vendor or satellite broadcast programming vendor for satellite cable
programming or satellite broadcast programming that prevents a multichannel video
programming distributor from obtaining such programming from any satellite cable programming
vendor in which a common carrier or its affiliate has an attributable interest, or any satellite
broadcasting vendor in which a common carrier or its affiliate has an attributable interest for
distribution to persons in areas not served by a cable operator as of October 5, 1992that such
common carrier or its affiliate shall be generally restricted from entering into an exclusive arrangement
for satellite cable programming or satellite broadcast programming with a satellite cable programming
vendor in which a common carrier or its affiliate has an attributable interest or a satellite broadcast
programming vendor in which a common carrier or its affiliate has an attributable interest unless the
arrangement pertains to an area served by a cable system as of October 5, 1992, and the Commission
determines in accordance with Section § 76.1002(c)(4) that such arrangement is in the public interest.
5.
Section 76.1507 is amended by revising paragraphs (a) and (b) to read as follows:
§ 76.1507 Competitive access to satellite cable programming
(a) Any provision that applies to a cable operator under §§ 76.1000 through 76.1003 shall also apply to an
operator of an open video system and its affiliate which provides video programming on its open video
system, except as limited by paragraph (a) (1)–(3) of this section. Any such provision that applies to a
satellite cable programming vendor in which a cable operator has an attributable interest shall also apply
to any satellite cable programming vendor in which an open video system operator has an attributable
interest, except as limited by paragraph (a) (1)–(3) of this section.
(1) Section 76.1002(c)(1) shall only restrict the conduct of an open video system operator, its affiliate that
provides video programming on its open video system and a satellite cable programming vendor in which
an open video system operator has an attributable interest, as follows: No open video system operator or
its affiliate that provides video programming on its open video system shall engage in any practice or
activity or enter into any understanding or arrangement, including exclusive contracts, with a satellite
cable programming vendor or satellite broadcast programming vendor for satellite cable programming or
satellite broadcast programming that prevents a multichannel video programming distributor from
obtaining such programming from any satellite cable programming vendor in which an open video system
operator has an attributable interest, or any satellite broadcasting vendor in which an open video system
operator has an attributable interest for distribution to person in areas not served by a cable operator as of
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October 5, 1992.(2) [Reserved] Section 76.1002(c)(2) shall only restrict the conduct of an open video system operator, its
affiliate that provides video programming on its open video system and a satellite cable programming
vendor in which an open video system operator has an attributable interest, as follows: No open video
system operator or its affiliate that provides video programming on its open video system shall enter into
any exclusive contracts, or engage in any practice, activity or arrangement tantamount to an exclusive
contract, for satellite cable programming or satellite broadcast programming with a satellite cable
programming vendor in which an open video system operator has an attributable interest or a satellite
broadcast programming vendor, unless the Commission determines in accordance with § 76.1002(c)(4)
that such a contract, practice, activity or arrangement is in the public interest.
(3) Section 76.1002(c)(3)(i) through (ii) shall only restrict the conduct of an open video system operator,
its affiliate that provides video programming on its open video system and a satellite cable programming
vendor in which an open video system operator has an attributable interest, as follows: (i) Unserved
areas.No open video system operator shall enter into any subdistribution agreement or arrangement for
satellite cable programming or satellite broadcast programming with a satellite cable programming vendor
in which an open video system operator has an attributable interest or a satellite broadcast programming
vendor in which an open video system operator has an attributable interest for distribution to persons in
areas not served by a cable operator as of October 5, 1992 unless such agreement or arrangement
complies with the limitations set forth in § 76.1002(c)(3)(ii) of this part.
(ii) Served areas. No open video system operator shall enter into any subdistribution agreement or
arrangement for satellite cable programming or satellite broadcast programming with a satellite cable
programming vendor in which an open video system operator has an attributable interest or a satellite
broadcast programming vendor in which an open video system operator has an attributable interest, with
respect to areas served by a cable operator, unless such agreement or arrangement complies with the
limitations set forth in § 76.1002(c)(3)(iii).
(b) No open video system programming provider in which a cable operator has an attributable interest
shall :(1) E engage in any practice or activity or enter into any understanding or arrangement, including
exclusive contracts, with a satellite cable programming vendor or satellite broadcast programming vendor
for satellite cable programming or satellite broadcast programming that prevents a multichannel video
programming distributor from obtaining such programming from any satellite cable programming vendor
in which a cable operator has an attributable interest, or any satellite broadcasting vendor in which a cable
operator has an attributable interest for distribution to person in areas not served by a cable operator as of
October 5, 1992.
(2) Enter into any exclusive contracts, or engage in any practice, activity or arrangement tantamount to an
exclusive contract, for satellite cable programming or satellite broadcast programming with a satellite
cable programming vendor in which a cable operator has an attributable interest or a satellite broadcast
programming vendor, unless the Commission determines in accordance with Section 76.1002(c)(4) that
such a contract, practice, activity or arrangement is in the public interest.
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APPENDIX E
Nationwide MVPD Subscribership
1st Annual Report2002 Extension
2007 Extension
Most Recent
# (and %) of57.9 million1
68.98 million
65.4 million
57.2 million
MVPD subscribers
(~95%)2
(78.11%)3
(67%)4
(57.4%)5
attributable to
cable operators
# (and %) of
40,0006
16.07 million
29.6 million
33.97 million
MVPD subscribers
(18.2%)7
(>30%)8
(34.1%)9
attributable to
DBS operators
1 See 1st Annual Report, 9 FCC Rcd at 7540, Table 5.1.
2 At the time the 1992 Cable Act was passed, cable operators served more than 95 percent of all multichannel
subscribers. See 2002 Extension Order, 17 FCC Rcd at 12132, ¶ 20.
3 See 8th Annual Report, 17 FCC Rcd at 1338; see also 2002 Extension Order, 17 FCC Rcd at 12132-33, ¶ 20 (citing
8th Annual Report, 17 FCC Rcd at 1247 (indicating that, at that time, 78 percent of MVPD subscribers received their
video programming from a cable operator, representing almost 69 million cable subscribers)).
4 See 2007 Extension Order, 22 FCC Rcd at 17806, ¶ 23 (citing 12th Annual Report, 21 FCC Rcd at 2507, ¶ 10 and
2617, Table B-1).
5 See SNL Kagan, U. S. Cable Subscriber Highlights, June 2012. The 57.4 percent figure was calculated by adding
the total number of cable subscribers, DBS subscribers, and Verizon/AT&T subscribers (99.67 million), then
dividing the number of cable subscribers (57.2 million) by the 99.67 million total. This is an estimate, and it
excludes certain overbuilders.
6 See 1st Annual Report, 9 FCC Rcd at 7475, ¶ 65.
7 See 8th Annual Report, 17 FCC Rcd at 1338. But see 2002 Extension Order, 17 FCC Rcd at 12134, ¶ 23 (citing 8th
Annual Report, 17 FCC Rcd at 1341 (indicating that DirecTV had at the time 11 million subscribers, and EchoStar
had 7 million subscribers, for a total of 18 million DBS subscribers)).
8 See 2007 Extension Order, 22 FCC Rcd at 17806, ¶ 23.
9 The 33.9 percent figure was calculated by adding the total number of cable subscribers, DBS subscribers, and
Verizon/AT&T subscribers (99.67 million), then dividing the number of DBS subscribers (33.97 million) by the
99.67 million total. See DIRECTV, Inc., SEC Form 8-K (Aug. 2, 2012) (stating that DIRECTV had 19.91 million
subscribers at the end of 2Q2012); DISH Network Corporation, SEC Form 8-K (July 19, 2012) (stating that DISH
had 14.06 million subscribers at the end of 2Q2012).
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1st Annual Report2002 Extension
2007 Extension
Most Recent
# (and %) ofN/A10
60,000 OVS
~1.9%12
8.5 million
MVPD subscribers
subscribers
Verizon/AT&T
attributable to
(0.07%)11
subscribers
wireline providers
(8.5%)13
% of MVPD
47.18%14
48%15
53-60%16
43.7%17
subscribers
receiving their
video
programming from
one of the four
largest cable
MSOs
10 See 2002 Extension Order, 17 RCC Rcd at 12134, ¶ 23 (“In 1996, the Communications Act was amended to allow
local exchange carriers to enter the video distribution market within their telephone service areas. . . .”).
11 See 8th Annual Report, 17 FCC Rcd at 1338; see also 2002 Extension Order, 17 FCC Rcd at 12135, ¶ 23 (citing 8th
Annual Report, 17 FCC Rcd at 1338).
12 See 2007 Extension Order, 22 FCC Rcd at 17807, ¶ 24. According to the 12th Annual Report, as of June 2005,
there were a total of 1.4 million OVS and Broadband Service Provider (“BSP”) subscribers, which represented 1.49
percent of MVPD subscribers. See 12th Annual Report, 21 FCC Rcd at 2617, Table B-1.
13 See AT&T, Inc., SEC Form 8-K (July 24, 2012) (stating that AT&T had 4.1 million U-verse video subscribers at
the end of 2Q2012); Verizon Communications, Inc., SEC Form 10-Q (July 30, 2012) (stating that Verizon had 4.4
million FiOS TV video subscribers at the end of 2Q2012). The 8.5 percent figure was calculated by adding the total
number of cable subscribers, DBS subscribers, and Verizon/AT&T subscribers (99.67 million), then dividing the
number of Verizon and AT&T subscribers (8.5 million) by the 99.67 million total.
14 See 1st Annual Report, 9 FCC Rcd at 7586.
15 See 2002 Extension Order, 17 FCC Rcd at 12133, ¶ 21 (citing 8th Annual Report, 17 FCC Rcd at 1341).
16 See 2007 Extension Order, 22 FCC Rcd at 17808, ¶ 27.
17 This figure was calculated by adding the number of subscribers for each of the four largest cable companies in
terms of subscribers (Comcast, TWC, Cox, and Charter, a collective total of 43,531,675 subscribers) and dividing by
99.67 million, our estimated number of total MVPD subscribers. See SNL Kagan, U. S. Cable Subscriber
Highlights, June 2012.
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1st Annual Report2002 Extension
2007 Extension
Most Recent
% of MVPD47.18%18
34%19
54-56.75%20
42.7%21
subscribers
receiving their
video
programming from
one of the four
largest vertically
integrated cable
MSOs
18 See 1st Annual Report, 9 FCC Rcd at 7586. All but one of the ten largest MSOs had attributable ownership
interests in at least one programming service. See id. at 7526, ¶ 168. The one MSO without attributable ownership
interests was not among the top four cable MSOs. See id. at 7586.
19 See 2002 Extension Order, 17 FCC Rcd at 12133, ¶ 20 (citing 8th Annual Report, 17 FCC Rcd at 1341).
20 See 2007 Extension Order, 22 FCC Rcd at 17809, ¶ 27.
21 Four of the top five cable operators in terms of subscribers hold ownership interests in satellite-delivered, national
programming networks. See infra Appendix F, Table 4 (Comcast, TWC, Cox, and Cablevision). This figure was
calculated by adding the number of subscribers for each of these cable operators (a total of 42,519,675 subscribers)
and dividing by 99.67 million, our estimated number of total MVPD subscribers. See SNL Kagan, U. S. Cable
Subscriber Highlights, June 2012.
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APPENDIX F
Satellite-Delivered, Cable-Affiliated, National Programming Networks
Table 1
1st Annual2002 Extension
2007 Extension
Most Recent
Report
# of Top 20 satellite-10 of the Top
9 of the Top 202
6 of the Top 203
4 of the Top 204
delivered, national
251
programming
Excluding Comcast-
networks (as ranked
controlled networks:
by subscribership)
that are cable-
3 of the Top 20
affiliated
# of Top 20 satellite-
12 of the Top
7 of the Top 206
7 of the Top 207
3 of the Top 208
delivered, national
155
programming
Excluding Comcast-
networks (as ranked
controlled networks:
by average prime
time ratings) that are
1 of the Top 20
cable-affiliated
# of cable operators
10, at least9
510
511
612
that own
programming
Table 2 – Top 20 National Cable Networks Ranked by Subscribership13
1 See 1st Annual Report, 9 FCC Rcd at 7599.
2 See 2002 Extension Order, 17 FCC Rcd at 12132, ¶ 18 (citing 8th Annual Report, 17 FCC Rcd at 1363).
3 See 2007 Extension Order, 22 FCC Rcd at 17803, ¶ 19.
4 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 30 (listing the following satellite-
delivered, cable-affiliated national networks as among the Top 20 in terms of subscribers: Discovery Channel,
Weather Channel, and TLC (also listing USA Network, which is subject to program access merger conditions
adopted in the Comcast/NBCU Order)).
5 See 1st Annual Report, 9 FCC Rcd at 7600.
6 See 2002 Extension Order, 17 FCC Rcd at 12132, ¶ 18 (citing 8th Annual Report, 17 FCC Rcd at 1364).
7 See 2007 Extension Order, 22 FCC Rcd at 17803-04, ¶ 19.
8 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 46 (listing the following satellite-
delivered, cable-affiliated national network as among the Top 20 in terms of average prime time ratings: Discovery
(also listing USA Network and Syfy, both of which are subject to program access merger conditions adopted in the
Comcast/NBCU Order)).
9 See 1st Annual Report, 9 FCC Rcd at 7596-98. Four of the top ten cable MSOs had an interest in at least 40 of the
56 satellite-delivered, cable-affiliated, national programming networks existing at that time. See id.
10 See 2002 Extension Order, 17 FCC Rcd at 12131, ¶ 18 (citing 8th Annual Report, 17 FCC Rcd at 1310). Four of
these were among the seven largest cable MSOs. See id.
11 See 2007 Extension Order, 22 FCC Rcd at 17804, ¶ 20 (citing 12th Annual Report, 21 FCC Rcd at 2620, Table B-
3). All of the five were among the six largest cable MSOs. See id.
12 See infra Appendix F, Table 4; Appendix G, Table 2 and Table 3.
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Network
Owner
Cable-Affiliated?
1. TBSTime Warner Inc.
No
2. Discovery
Discovery
Yes (Bright House)
3. USA Network
Comcast/NBCU
Yes, but Comcast-controlled and
thus subject to merger conditions
4. TNT
Time Warner Inc.
No
5. Weather Channel
Comcast/NBCU (non-controlling)
Yes (Comcast-affiliated)
6. Nickelodeon
Viacom
No
7. Food Network
Scripps/Tribune
No
8. CNN
Time Warner Inc.
No
9. ESPN
Disney
No
10. C-SPAN
C-SPAN
No
11. ESPN2
Disney
No
12. HGTV
Scripps
No
13. Spike TV
Viacom
No
14. TLC
Discovery
Yes (Bright House)
15. A&E
A&E (Disney/Hearst)
No14
16. Lifetime
A&E (Disney/Hearst)
No14
17. MTV
Viacom
No
18. Comedy Central
Viacom
No
19. Cartoon
Viacom
No
20. History
A&E (Disney/Hearst)
No14
13 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 30.
14 As discussed above, Comcast has sold its interest in A&E. See supra Order at ¶¶ 14, 26.
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Table 3 – Top 20 National Cable Networks Ranked by Average Prime Time Ratings15
Network
Owner
Cable-Affiliated?
1. USA NetworkComcast/NBCU
Yes, but Comcast-controlled and
thus subject to merger conditions
2. Disney Channel
Disney
No
3. ESPN
Disney
No
4. Nickelodeon
Viacom
No
5. TNT
Time Warner Inc.
No
6. Fox News
Fox
No
7. TBS
Time Warner Inc.
No
8. History
A&E (Disney/Hearst)
No16
9. A&E
A&E (Disney/Hearst)
No16
10. Cartoon
Viacom
No
11. ABC Family
Disney
No
12. HGTV
Scripps
No
13. FX Network
Fox
No
14. Syfy
Comcast/NBCU
Yes, but Comcast-controlled and
thus subject to merger conditions
15. Discovery
Discovery
Yes (Bright House)
16. truTV
Time Warner Inc.
No
17. CNN
Time Warner Inc.
No
18. Lifetime
A&E (Disney/Hearst)
No16
19. Lifetime Movie
A&E (Disney/Hearst)
No16
Network
20. Food Network
Scripps/Tribune
No
15 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 46.
16 As discussed above, Comcast has sold its interest in A&E. See supra Order at ¶¶ 14, 26.
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Table 4 – List of Cable-Affiliated, Satellite-Delivered, National Programming Networks
Cable Operator
Affiliated, Satellite-Delivered, National Programming Network
Cablevision (10)17AMC (owned by AMC Networks Inc.)
AMC HD
Fuse (owned by MSG)
Fuse HD
Independent Film Channel (owned by AMC Networks Inc.)
Independent Film Channel HD
Sundance Channel (owned by AMC Networks Inc.)
Sundance Channel HD
WE tv (owned by AMC Networks Inc.)
WE tv HD
Comcast (43)18
Comcast-controlled networks (30)19
Bravo
Bravo HD
Chiller
Chiller HD
CNBC
CNBC HD
CNBC World
E! Entertainment Television
E! Entertainment Television HD
G4
G4 HD
Golf Channel
Golf Channel HD
MSNBC
MSNBC HD
Mun2
Oxygen
Oxygen HD
Cloo (formerly Sleuth)
Syfy
Syfy HD
17 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 70, 74, 303; SNL Kagan, Cable Network
Ownership (July 2011).
18 See Comcast/NBCU Order, 26 FCC Rcd at 4410-18, Appendix D; GE/Comcast/NBCU Application at 19-20, 30-
31; SNL Kagan, Cable Network Ownership (July 2011); SNL Kagan, Economics of Basic Cable Networks (2011
Edition), at 68.
19 See supra Order, n.89 (explaining that Comcast-controlled networks are subject to program access merger
conditions adopted in the Comcast/NBCU Order).
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Cable Operator
Affiliated, Satellite-Delivered, National Programming Network
Comcast (continued)Comcast-controlled networks (continued)
The Style Network
The Style Network HD
Universal HD
Universal Sports
Universal Sports HD
USA Network
USA Network HD
NBC Sports Network (formerly Versus)
NBC Sports Network HD
Comcast-affiliated (but not controlled) networks (13)20
Current TV21
FEARnet22
FEARnet HD22
MusicChoice23
NHL Network24
NHL Network HD24
Shop NBC25
TV One26
TV One HD26
PBS Kids Sprout27
PBS Kids Sprout HD27
The Weather Channel28
The Weather Channel HD28
20 See Order, n.89 (explaining that Comcast-affiliated networks are not subject to the program access conditions
adopted in the Comcast/NBCU Order, but are subject to the program access rules, including the exclusive contract
prohibition).
21 See GE/Comcast/NBCU Application at 20 (stating that Comcast has a 10 percent interest in Current Media); see
also Comcast/NBCU Order, 26 FCC Rcd at 4415, Appendix D.
22 See Comcast 2011 SEC Form 10-K at 8 (stating that Comcast has a 31 percent interest in FEARNet);
GE/Comcast/NBCU Application at 20; see also Comcast/NBCU Order, 26 FCC Rcd at 4414, Appendix D.
23 See Comcast 2011 SEC Form 10-K at 8 (stating that Comcast has a 12 percent interest in MusicChoice);
GE/Comcast/NBCU Application at 20.
24 See GE/Comcast/NBCU Application at 20 (stating that Comcast has a 15.6 percent interest in NHL Network); see
also Comcast/NBCU Order, 26 FCC Rcd at 4415, Appendix D.
25 See Comcast/NBCU Order, 26 FCC Rcd at 4411, Appendix D; GE/Comcast/NBCU Application at 31;
ValueVision Media, Inc., SEC Form 10-Q (Sept. 8, 2011), at 12.
26 See Comcast 2011 SEC Form 10-K at 8 (stating that Comcast has a 34 percent interest in TV One);
GE/Comcast/NBCU Application at 20; see also Comcast/NBCU Order, 26 FCC Rcd at 4414, Appendix D.
27 See Comcast 2011 SEC Form 10-K at 8 (stating that Comcast has a 40 percent interest in PBS KIDS Sprout);
GE/Comcast/NBCU Application at 20; see also Comcast/NBCU Order, 26 FCC Rcd at 4414, Appendix D.
28 See Comcast 2011 SEC Form 10-K at 12 (stating that NBCU has a 25 percent interest in The Weather Channel);
GE/Comcast/NBCU Application at 31; see also Comcast/NBCU Order, 26 FCC Rcd at 4411, Appendix D.
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Cable Operator
Affiliated, Satellite-Delivered, National Programming Network
Bright House (throughAnimal Planet
affiliation with
Animal Planet HD
Discovery)29 (22)
Discovery
Discovery HD
Discovery en Español
Discovery Familia
Discovery Fit & Health
Velocity (HD only)
Investigation Discovery
Investigation Discovery HD
Military Channel
Planet Green
Planet Green HD
Science
Science HD
TLC
TLC HD
OWN: Oprah Winfrey Network
OWN: Oprah Winfrey Network HD
The Hub
The Hub HD
3net (3D)
Cox (2)30
Travel Channel
Travel Channel HD
29 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 69; SNL Kagan, Cable Network
Ownership (July 2011); see also Liberty Media Order, 23 FCC Rcd at 3300-02, ¶¶ 78-80 (explaining that Discovery
is a cable-affiliated programmer due to its affiliation with Advance-Newhouse, which holds an attributable interest
in a cable system).
30 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 70; SNL Kagan, Cable Network
Ownership (July 2011).
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Cable Operator
Affiliated, Satellite-Delivered, National Programming Network
Other31 (23)MLB Network (affiliated with Comcast, Cox, TWC)32
MLB Network HD (affiliated with Comcast, Cox, TWC)32
iN DEMAND L.L.C. (21)33
iN Demand 1, 2, 3, 4, 5, 6 and 7
Hot Choice
Hot Choice HD
NBA League Pass
NBA League Pass HD
MLS Direct Kick
MLS Direct Kick HD
MLB Extra Innings
MLB Extra Innings HD
NHL Center Ice
NHL Center Ice HD
GameHD
Game2HD
Team HD
HDPPV
31 These networks are affiliated with more than one cable operator.
32 See SNL Kagan, Economics of Basic Cable Networks (2011 Edition), at 67, 405. Because Comcast has a less
than 50 percent interest in MLB Network, we consider MLB Network for purposes of the estimates in this Order to
be a “Comcast-affiliated” network, and not a “Comcast-controlled” network subject to the program access
conditions adopted in the Comcast/NBCU Order. See supra Order, n.89; GE/Comcast/NBCU Application at 20
(stating that Comcast has a 8.3 percent interest in MLB Network).
33 See TWC/Insight Application at Exhibit F (listing national programming services owned by iN DEMAND). iN
DEMAND is affiliated with Comcast, Cox, TWC, and Bright House Networks. See About iN DEMAND –
Ownership, available at http://www.indemand.com/business/business-overview/about/ownership.php. For the
reasons discussed above, for purposes of the estimates in this Order, we consider the iN DEMAND networks to be
“Comcast-affiliated” networks, and not “Comcast-controlled” networks subject to the program access conditions
adopted in the Comcast/NBCU Order. See supra Order, n.89.
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APPENDIX G
Cable-Affiliated, Regional Sports Networks
Table 1
1st Annual2002
2007 Extension
Most Recent
Report
Extension
# of RSNsN/A1
282
393
108 (SD and HD;
including terrestrially
and satellite-
delivered)4
# (and %) of cable-
N/A5
24 (86%)6
18 (46%)7
32 (SD and HD;
affiliated RSNs
satellite-delivered
only) (30%)8
Excluding Comcast-
controlled networks:
18 out of 108 (17%)
1 In 1998, there were 27 regional sports programming services. See Annual Assessment of the Status of Competition
in the Market for the Delivery of Video Programming, Fifth Annual Report, 13 FCC Rcd 24284, 24439-41 (1998)
(“5th Annual Report”).
2 See 2002 Extension Order, 17 FCC Rcd at 12132, ¶ 19 (citing 8th Annual Report, 17 FCC Rcd at 1354-56).
3 See 2007 Extension Order, 22 FCC Rcd at 17805, ¶ 21.
4 See NPRM, 27 FCC Rcd at 3429, ¶ 28 n.98 (explaining that previous RSN estimates did not consider SD and HD
RSNs separately); SNL Kagan, Media Trends (2011 Edition), at 70-74; SNL Kagan, RSN Subscribers (August 26,
2011); GE/Comcast/NBCU Application at 21; TWC/Insight Application at 3-4 and Exhibit F; see also 13th Annual
Report, 24 FCC Rcd at 551, ¶ 21 (43 RSNs as of June 2006).
5 In 1998, 22 of the regional sports programming services (82 percent) were affiliated with at least one cable MSO.
See 5th Annual Report, 13 FCC Rcd at 24439-41.
6 See 2002 Extension Order, 17 FCC Rcd at 12132, ¶ 19 (citing 8th Annual Report, 17 FCC Rcd at 1354-56).
7 See 2007 Extension Order, 22 FCC Rcd at 17805, ¶ 22.
8 See infra Appendix G, Table 2; SNL Kagan, Media Trends (2011 Edition), at 70-74; see also 13th Annual Report,
24 FCC Rcd at 551, ¶ 21 (19 out of 43 RSNs (44 percent) were cable-affiliated as of June 2006).
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Table 2 – List of Satellite-Delivered, Cable-Affiliated, Regional Sports Networks9
Cable Operator
Affiliated, Satellite-Delivered RSN10
Bright House Networks (2)Bright House Sports Network11
Bright House Sports Network HD11
Cablevision (2)12
MSG
MSG Plus
Comcast (20)13
Comcast-controlled RSNs (14)14
Cable Sports Southeast (Comcast, Charter)15
Cable Sports Southeast HD (Comcast, Charter)15
Comcast SportsNet California
Comcast SportsNet California HD
Comcast SportsNet Mid-Atlantic
Comcast SportsNet Mid-Atlantic HD16
Comcast SportsNet New England
Comcast SportsNet New England HD
Comcast SportsNet Northwest
Comcast SportsNet Northwest HD
Comcast Sports Southwest
Comcast Sports Southwest HD
Comcast SportsNet Bay Area17
Comcast SportsNet Bay Area HD17
9 This list is provided for illustrative purposes only. Inclusion or exclusion of a network should not be read to state
or imply any position as to whether the network qualifies as an “RSN” as defined by the Commission.
10 See SNL Kagan, Media Trends (2011 Edition), at 70-74; GE/Comcast/NBCU Application at 21.
11 See Media Bureau RSN Report at ¶ 16 n.52; Bright House Customers to See Exclusive Coverage of Top College
Basketball Games, available at http://brighthouse.com/corporate/about/738.htm. We do not have information as to
whether Bright House Sports Network and Bright House Sports Network HD are satellite-delivered or terrestrially
delivered. For purposes of this Order, we assume these networks are satellite-delivered. See supra Order, n.110.
12 See Cablevision July 11 Letter at 1.
13 See Comcast July 11 Letter at 2.
14 See supra Order, n.89 (explaining that Comcast-controlled networks are subject to program access merger
conditions adopted in the Comcast/NBCU Order).
15 Because Comcast has a 50 percent or greater interest in Cable Sports Southeast, we consider Cable Sports
Southeast for purposes of the estimates in this Order to be a “Comcast-controlled” network subject to the program
access conditions adopted in the Comcast/NBCU Order. See supra Order, n.89; GE/Comcast/NBCU Application at
21 (stating that Comcast has a 81 percent interest in Comcast/Charter Sports Southeast).
16 Comcast states that Comcast SportsNet Mid-Atlantic HD is moving from terrestrial to satellite delivery in
December 2012. See Comcast July 11 Letter at 2 n.5.
17 Because Comcast has a 50 percent or greater interest in Comcast SportsNet Bay Area, we consider Comcast
SportsNet Bay Area for purposes of the estimates in this Order to be a “Comcast-controlled” network subject to the
program access conditions adopted in the Comcast/NBCU Order. See supra Order, n.89; GE/Comcast/NBCU
Application at 21 (stating that Comcast has a 67 percent interest in Comcast SportsNet Bay Area).
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Cable Operator
Affiliated, Satellite-Delivered RSN
Comcast (continued)Comcast-affiliated (but not controlled) RSNs (6)18
Comcast SportsNet Chicago19
Comcast SportsNet Chicago HD19
Comcast SportsNet Houston20
Comcast SportsNet Houston HD20
Midco Sports Network21
Midco Sports Network HD21
Cox (2)
Cox Sports Television (New Orleans)22
Cox Sports Television HD (New Orleans)22
Time Warner Cable (4)23
Time Warner Cable SportsNet24
Time Warner Cable SportsNet HD24
Time Warner Cable Deportes24
Time Warner Cable Deportes HD24
18 See supra Order, n.89 (explaining that Comcast-affiliated networks are not subject to the program access
conditions adopted in the Comcast/NBCU Order, but are subject to the program access rules, including the exclusive
contract prohibition).
19 Because Comcast has a less than 50 percent interest in Comcast SportsNet Chicago, we consider Comcast
SportsNet Chicago for purposes of the estimates in this Order to be a “Comcast-affiliated” network, and not a
“Comcast-controlled” network subject to the program access conditions adopted in the Comcast/NBCU Order. See
supra Order, n.89; GE/Comcast/NBCU Application at 21 (stating that Comcast has a 30 percent interest in Comcast
SportsNet Chicago).
20 Comcast SportsNet Houston is scheduled to launch in 2012, featuring the games of the Houston Astros (of MLB)
and the Houston Rockets (of the NBA). See Go Back to the Future When the Astros and Rockets Launch Their
Channel, It Likely Will Remind Viewers of HSE (Nov. 8, 2010), available at http://www.chron.com/sports/rockets/
article/Astros-Rockets-network-likely-to-resemble-old-1705389.php. Because Comcast will have a less than 50
percent interest in Comcast SportsNet Houston, we consider Comcast SportsNet Houston for purposes of the
estimates in this Order to be a “Comcast-affiliated” network, and not a “Comcast-controlled” network subject to the
program access conditions adopted in the Comcast/NBCU Order. See id.; Comcast 2011 SEC Form 10-K at 8; see
also supra Order, n.89. We do not have information as to whether Comcast SportsNet Houston and Comcast
SportsNet Houston HD will be satellite-delivered or terrestrially delivered. For purposes of this Order, we assume
these networks will be satellite-delivered. See supra Order, n.110.
21 We do not have information as to whether Midco Sports Network and Midco Sports Network HD are satellite-
delivered or terrestrially delivered. For purposes of this Order, we assume these networks are satellite-delivered.
See supra Order, n.110.
22 We do not have information as to whether Cox Sports Television and Cox Sports Television HD are satellite-
delivered or terrestrially delivered. For purposes of this Order, we assume these networks are satellite-delivered.
See supra Order, n.110.
23 See TWC July 11th Letter at 2; see also Media Bureau RSN Report at ¶ 16 n.52; TWC/Insight Application at 3-4
and Exhibit F.
24 TWC recently announced that it will launch four RSNs (including both SD and HD) in 2012 featuring the games
of the Los Angeles Lakers (of the NBA), including the first Spanish-language RSN. See Time Warner Cable and
the Los Angeles Lakers Sign Long-Term Agreement for Lakers Games, Beginning With 2012-2013 Season (Feb. 14,
2011), available at http://ir.timewarnercable.com/phoenix.zhtml?c=207717&p=irol-
newsArticle&ID=1528805&highlight. We do not have information as to whether these RSNs will be satellite-
delivered or terrestrially delivered. For purposes of this Order, we assume these networks are satellite-delivered.
See supra Order, n.110.
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Cable Operator
Affiliated, Satellite-Delivered RSN
Other (2)SportsNet New York (Comcast, TWC)25
SportsNet New York HD (Comcast, TWC)25
Total satellite-delivered, cable-affiliated RSNs (other than Comcast-controlled RSNs):
18Total satellite-delivered, Comcast-controlled RSNs:
14TOTAL:
3225 Because Comcast has a less than 50 percent interest in SportsNet New York, we consider SportsNet New York for
purposes of the estimates in this Order to be a “Comcast-affiliated” network, and not a “Comcast-controlled”
network subject to the program access conditions adopted in the Comcast/NBCU Order. See supra Order, n.89;
Comcast 2011 SEC Form 10-K at 8 (stating that Comcast has a 8 percent interest in SportsNet New York);
GE/Comcast/NBCU Application at 21.
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Table 3 – List of Terrestrially Delivered, Cable-Affiliated, Regional Sports Networks26
Cable Operator
Affiliated, Terrestrially Delivered RSN27
Cablevision (2)28MSG HD
MSG Plus HD
Comcast (4)29
Comcast-controlled RSNs (4)30
Comcast SportsNet Philadelphia
Comcast SportsNet Philadelphia HD
The Comcast Network (Philadelphia)
The Comcast Network HD (Philadelphia)
Cox (2)
Channel 4 San Diego
Channel 4 San Diego HD
Time Warner Cable (16)31
Metro Sports (Kansas City)
Metro Sports HD (Kansas City)
OC Sports (Hawaii)
OC Sports HD (Hawaii)
Source 16/Racer TV (Southern Kentucky)
TWC Sports (Albany)
TWC Sports HD (Albany)
TWC Sports (Syracuse)
TWC Sports HD (Syracuse)
TWC SportsNet (Buffalo)
TWC SportsNet HD (Buffalo)
TWC SportsNet (Rochester)
TWC SportsNet HD (Rochester)
TWC Sports 32 (Wisconsin)
TWC Sports 32 HD (Wisconsin)
Texas Channel (Texas)
Total terrestrially delivered, cable-affiliated RSNs (other than Comcast-controlled RSNs): 20
Total terrestrially delivered, Comcast-controlled RSNs:
TOTAL:
2426 This list is provided for illustrative purposes only. Inclusion or exclusion of a network should not be read to state
or imply any position as to whether the network qualifies as an “RSN” as defined by the Commission.
27 See SNL Kagan, Media Trends (2011 Edition), at 70-74; GE/Comcast/NBCU Application at 21.
28 See Cablevision July 11 Letter at 1.
29 See Comcast July 11 Letter at 2.
30 See supra Order, n.89 (explaining that Comcast-controlled networks are subject to program access merger
conditions adopted in the Comcast/NBCU Order).
31 See TWC July 11 Letter at 2.
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Table 4 – List of Unaffiliated, Regional Sports Networks
32Altitude Sports Network
Altitude Sports Network HD
Big Ten Network
Big Ten Network HD
Fox Sports Arizona
Fox Sports Arizona HD
Fox Sports Carolinas
Fox Sports Carolinas HD
Fox Sports Detroit
Fox Sports Detroit HD
Fox Sports Florida
Fox Sports Florida HD
Fox Sports Midwest
Fox Sports Midwest HD
Fox Sports North
Fox Sports North HD
Fox Sports Ohio
Fox Sports Ohio HD
Fox Sports Prime Ticket
Fox Sports Prime Ticket HD
Fox Sports South
Fox Sports South HD
Fox Sports Southwest
Fox Sports Southwest HD
Fox Sports Tennessee
Fox Sports Tennessee HD
Fox Sports West
Fox Sports West HD
Fox Sports Wisconsin
Fox Sports Wisconsin HD
Longhorn Network
Longhorn Network HD
MASN
MASN HD
NESN
NESN HD
PAC-12 Network
PAC-12 Network HD
32 See SNL Kagan, Media Trends (2011 Edition), at 70-74. This list is provided for illustrative purposes only.
Inclusion or exclusion of a network should not be read to state or imply any position as to whether the network
qualifies as an “RSN” as defined by the Commission.
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Root Sports Northwest (formerly DIRECTVSports Net Northwest)
Root Sports Northwest HD
Root Sports Pittsburgh (formerly DIRECTV
Sports Net Pittsburgh)
Root Sports Pittsburgh HD
Root Sports Rocky Mountain (formerly
DIRECTV Sports Net Rocky Mountain)
Root Sports Rocky Mountain HD
SportSouth
SportSouth HD
Sports Time Ohio
Sports Time Ohio HD
Sun Sports
Sun Sports HD
YES Network
YES Network HD
TOTAL:
52100
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APPENDIX H
Potential Amendments to the Program Access Rules Based on the FNPRM
The Federal Communications Commission proposes to amend Part 76 of Title 47 of the Code of FederalRegulations (CFR) as follows:
PART 76 — MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
1.
The authority citation for Part 76 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325,
339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556,
558, 560, 561, 571, 572 and 573.
2.
Amend Section 76.1000 by revising paragraphs (c)(1) and (c)(3), adding new paragraph (c)(4), and
revising paragraph (j) to read as follows:
§ 76.1000 Definitions.
* * * * *
(c) Buying groups. The term “buying group” or “agent,” for purposes of the definition of a multichannel
video programming distributor set forth in paragraph (e) of this section, means an entity representing the
interests of more than one entity distributing multichannel video programming that:
(1) (i) Agrees to be financially liable for any fees due pursuant to a satellite cable programming, satellite
broadcast programming, or terrestrial cable programming contract which it signs as a contracting party as
a representative of its members, or (ii) whose members, as contracting parties, agree to joint and several
liability, or (iii) maintains liquid cash or credit reserves (i.e., cash, cash equivalents, or letters or
lines of credit) equal to cover the cost of one month’s programming for all buying group members,
or (iv) agrees to assume liability to forward to the appropriate programmer all fees due and
received from its members for payment under a programming contract; and
(2) Agrees to uniform billing and standardized contract provisions for individual members; and
(3) Agrees either collectively or individually on reasonable technical quality standards for the individual
members of the group; and
(4) Does not unreasonably deny membership to any multichannel video programming distributor
that requests membership.
* * * * *
(j) Similarly situated. The term “similarly situated” means, for the purposes of evaluating alternative
programming contracts offered by a defendant programming vendor or by a terrestrial cable programming
vendor alleged to have engaged in conduct described in § 76.1001(b)(1)(ii), that an alternative
multichannel video programming distributor has been identified by the defendant as being more properly
compared to the complainant in order to determine whether a violation of § 76.1001(a) or § 76.1002(b)
has occurred. The analysis of whether an alternative multichannel video programming distributor is
properly comparable to the complainant includes consideration of, but is not limited to, such factors as
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whether the alternative multichannel video programming distributor operates within a geographic regionproximate to the complainant, has roughly the same number of subscribers as the complainant, and
purchases a similar service as the complainant. Such alternative multichannel video programming
distributor, however, must use the same distribution technology as the “competing” distributor with
whom the complainant seeks to compare itself.
For purposes of determining the size of a volume
discount applicable to a buying group, a buying group will be considered similarly situated to an
alternative multichannel video programming distributor with approximately the same number of
subscribers for the programming as expected to be supplied by the buying group.
2.
Amend Section 76.1002 by revising the Note to paragraph (b)(3) and adding new paragraph (g) to
read as follows:
§ 76.1002 Specific unfair practices prohibited.
* * * * *
(b) Discrimination in prices, terms or conditions. No satellite cable programming vendor in which a cable
operator has an attributable interest, or satellite broadcast programming vendor, shall discriminate in the
prices, terms, and conditions of sale or delivery of satellite cable programming or satellite broadcast
programming among or between competing cable systems, competing cable operators, or any competing
multichannel video programming distributors. Nothing in this subsection, however, shall preclude:
(1) The imposition of reasonable requirements for creditworthiness, offering of service, and financial
stability and standards regarding character and technical quality;
Note 1: Vendors are permitted to create a distinct class or classes of service in pricing based on credit
considerations or financial stability, although any such distinctions must be applied for reasons for other
than a multichannel video programming distributor’s technology. Vendors are not permitted to manifest
factors such as creditworthiness or financial stability in price differentials if such factors are already taken
into account through different terms or conditions such as special credit requirements or payment
guarantees.
Note 2: Vendors may establish price differentials based on factors related to offering of service, or
difference related to the actual service exchanged between the vendor and the distributor, as manifested in
standardly applied contract terms based on a distributor’s particular characteristics or willingness to
provide secondary services that are reflected as a discount or surcharge in the programming service’s
price. Such factors include, but are not limited to, penetration of programming to subscribers or to
particular systems; retail price of programming to the consumer for pay services; amount and type of
promotional or advertising services by a distributor; a distributor’s purchase of programming in a package
or a la carte; channel position; importance of location for non-volume reasons; prepayment discounts;
contract duration; date of purchase, especially purchase of service at launch; meeting competition at the
distributor level; and other legitimate factors as standardly applied in a technology neutral fashion.
(2) The establishment of different prices, terms, and conditions to take into account actual and reasonable
differences in the cost of creation, sale, delivery, or transmission of satellite cable programming, satellite
broadcast programming, or terrestrial cable programming;
Note: Vendors may base price differentials, in whole or in part, on differences in the cost of delivering a
programming service to particular distributors, such as differences in costs, or additional costs, incurred
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for advertising expenses, copyright fees, customer service, and signal security. Vendors may base pricedifferentials on cost differences that occur within a given technology as well as between technologies. A
price differential for a program service may not be based on a distributor’s retail costs in delivering
service to subscribers unless the program vendor can demonstrate that subscribers do not or will not
benefit from the distributor’s cost savings that result from a lower programming price.
(3) The establishment of different prices, terms, and conditions which take into account economies of
scale, cost savings, or other direct and legitimate economic benefits reasonably attributable to the number
of subscribers served by the distributor; or
Note: Vendors may use volume-related justifications to establish price differentials to the extent that such
justifications are made available to similarly situated distributors on a technology-neutral basis. When
relying upon standardized volume-related factors that are made available to all multichannel video
programming distributors using all technologies, the vendor may be required to demonstrate that such
volume discounts are reasonably related to direct and legitimate economic benefits reasonably attributable
to the number of subscribers served by the distributor if questions arise about the application of that
discount. In such demonstrations, vendors will not be required to provide a strict cost justification for the
structure of such standard volume-related factors, but may also identify non-cost economic benefits
related to increased viewership.
Vendors may not use volume-related justifications to establish price
differentials between a buying group and an alternative multichannel video programming
distributor that has approximately the same number of subscribers for the programming as
expected to be supplied by the buying group.
section.
* * * * *
(g) Buying Groups.
(1) Right to Participate in Buying Group Programming Contracts.
No satellite cable programming
vendor in which a cable operator has an attributable interest or satellite broadcast programming
vendor may unreasonably interfere with or prevent a member of a buying group from participating
in a programming contract in which a buying group signs as a contracting party as a representative
of its members if: (i) the member has no more than three million subscribers; or (ii) the share of
programming that the member licenses through the buying group is not significantly smaller than
the average share of programming that other members of the buying group license through the
buying group. Upon the expiration of a satellite cable programming or satellite broadcast
programming contract which a buying group signs as a contracting party as a representative of its
members, all buying group members participating in the expiring programming contract shall be
presumptively entitled to participate in the renewed programming contract.
group that specifies a schedule of non-discriminatory license fees over any range of subscribership
levels that the buying group requests, provided that it is possible that the buying group could
provide this number of subscribers from its current members eligible to participate in the
programming contract.
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APPENDIX I
Standard Protective Order and Declaration for Use in Section 628 Program Access Proceedings
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of)
)
Docket No. ________________
[Name of Proceeding]
)
PROTECTIVE ORDER
1.
This Protective Order is intended to facilitate and expedite the review of documents filed
in this proceeding or obtained from a person in the course of discovery that contain trade secrets and
privileged or confidential commercial or financial information. It establishes the manner in which
“Confidential Information,” as that term is defined herein, is to be treated. The Order is not intended to
constitute a resolution of the merits concerning whether any Confidential Information would be released
publicly by the Commission upon a proper request under the Freedom of Information Act (“FOIA”) or
other applicable law or regulation, including 47 C.F.R. § 0.442.
2.
Definitions.
a. Authorized Representative. “Authorized Representative” shall have the meaning set
forth in Paragraph 7.
b. Commission. “Commission” means the Federal Communications Commission or any
arm of the Commission acting pursuant to delegated authority.
c. Confidential Information. “Confidential Information” means (i) information submitted
to the Commission by the Submitting Party that has been so designated by the Submitting Party and
which the Submitting Party has determined in good faith constitutes trade secrets and commercial or
financial information which is privileged or confidential within the meaning of Exemption 4 of the
Freedom of Information Act, 5 U.S.C. § 552(b)(4) and (ii) information submitted to the Commission by
the Submitting Party that has been so designated by the Submitting Party and which the Submitting Party
has determined in good faith falls within the terms of Commission orders designating the items for
treatment as Confidential Information. Confidential Information includes additional copies of, notes, and
information derived from Confidential Information.
d. Declaration. “Declaration” means Attachment A to this Protective Order.
e. Reviewing Party. “Reviewing Party” means a person or entity participating in this
proceeding or considering in good faith filing a document in this proceeding.
f. Submitting Party. “Submitting Party” means a person or entity that seeks confidential
treatment of Confidential Information pursuant to this Protective Order.
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3.Claim of Confidentiality. The Submitting Party may designate information as
“Confidential Information” consistent with the definition of that term in Paragraph 2.c of this Protective
Order. The Commission may, sua sponte or upon petition, pursuant to 47 C.F.R. §§ 0.459 and 0.461,
determine that all or part of the information claimed as “Confidential Information” is not entitled to such
treatment.
4.
Procedures for Claiming Information is Confidential. Confidential Information submitted
to the Commission shall be filed under seal and shall bear on the front page in bold print, “CONTAINS
CONFIDENTIAL INFORMATION - DO NOT RELEASE.” Confidential Information shall be
segregated by the Submitting Party from all non-confidential information submitted to the Commission.
To the extent a document contains both Confidential Information and non-confidential information, the
Submitting Party shall designate the specific portions of the document claimed to contain Confidential
Information and shall, where feasible, also submit a redacted version not containing Confidential
Information. By designating information as Confidential Information, a Submitting Party signifies that it
has determined in good faith that the information should be subject to protection under FOIA, the
Commission’s implementing rules, and this Protective Order.
5.
Storage of Confidential Information at the Commission. The Secretary of the
Commission or other Commission staff to whom Confidential Information is submitted shall place the
Confidential Information in a non-public file. Confidential Information shall be segregated in the files of
the Commission, and shall be withheld from inspection by any person not bound by the terms of this
Protective Order, unless such Confidential Information is released from the restrictions of this Order
either through agreement of the parties, or pursuant to the order of the Commission or a court having
jurisdiction.
6.
Commission Access to Confidential Information. Confidential Information shall be made
available to Commission staff and Commission consultants. Consultants under contract to the
Commission may obtain access to Confidential Information only if they have signed, as part of their
employment contract, a non-disclosure agreement the scope of which includes the Confidential
Information, or if they execute the attached Declaration.
7.
Disclosure. Subject to the requirements of Paragraph 9, Confidential Information may be
reviewed by counsel to the Reviewing Parties, or if a Reviewing Party has no counsel, to a person
designated by the Reviewing Party. Subject to the requirements of Paragraph 9, counsel to a Reviewing
Party or such other person designated by the Reviewing Party may disclose Confidential Information to
other Authorized Representatives only after advising such Authorized Representatives of the terms and
obligations of the Order and provided that the Authorized Representatives have signed the Declaration
and served it appropriately in accordance with paragraph 9, and the Authorized Representatives are of the
type of persons listed in subparagraphs 8.a., b., and c.
8.
Authorized Representatives shall be limited to:
a. Subject to Paragraph 8.d, counsel for the Reviewing Parties to this proceeding,
including in-house counsel, actively engaged in the conduct of this proceeding and their associated
attorneys, paralegals, clerical staff and other employees, to the extent reasonably necessary to render
professional services in this proceeding;
b. Subject to Paragraph 8.d, specified persons, including employees of the Reviewing
Parties, requested by counsel to furnish technical or other expert advice or service, or otherwise engaged
to prepare material for the express purpose of formulating filings in this proceeding; and
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c. Subject to Paragraph 8.d., any person designated by the Commission in the publicinterest, upon such terms as the Commission may deem proper; except that,
d. disclosure shall be prohibited to any persons in a position to use the Confidential
Information for competitive commercial or business purposes, including persons involved in competitive
decision-making, which includes, but is not limited to, persons whose activities, association or
relationship with the Reviewing Parties or other Authorized Representatives involve rendering advice or
participating in any or all of the Reviewing Parties’, Authorized Representatives’ or any other person’s
business decisions that are or will be made in light of similar or corresponding information about a
competitor.
9.
Procedures for Obtaining Access to Confidential Information. In all cases where access
to Confidential Information is permitted pursuant to paragraph 7, before reviewing or having access to
any Confidential Information, each person seeking such access shall execute the Declaration in
Attachment A and file it with the Commission and serve it upon the Submitting Party through their
counsel, so that the Declaration is received by the Submitting Party at least five (5) business days prior to
such person’s reviewing or having access to Confidential Information. Each Submitting Party shall have
an opportunity to object to the disclosure of its Confidential Information to any such person. Any
objection must be filed at the Commission and served on counsel for such person within three (3)
business days after receipt of that person’s Declaration. Until any such objection is resolved by the
Commission and, if appropriate, any court of competent jurisdiction prior to any disclosure, and unless
such objection is resolved in favor of the person seeking access, persons subject to an objection from a
Submitting Party shall not have access to Confidential Information. If there is no objection or once such
objection is resolved, the Submitting Party shall make such material available for review as set forth in
Paragraph 10.
10.
Inspection of Confidential Information. Confidential Information shall be maintained by a
Submitting Party for inspection at two or more locations, at least one of which shall be in Washington,
D.C. Inspection shall be carried out by Authorized Representatives upon reasonable notice not to exceed
one business day during normal business hours.
11.
Copies of Confidential Information. The Submitting Party shall provide a copy of the
Confidential Material to Authorized Representatives upon request and may charge a reasonable copying
fee not to exceed twenty five cents per page. Authorized Representatives may make additional copies of
Confidential Information but only to the extent required and solely for the preparation and use in this
proceeding. Authorized Representatives must maintain a written record of any additional copies made
and provide this record to the Submitting Party upon reasonable request. The original copy and all other
copies of the Confidential Information shall remain in the care and control of Authorized Representatives
at all times. Authorized Representatives having custody of any Confidential Information shall keep the
documents properly and fully secured from access by unauthorized persons at all times.
12.
Use of Confidential Information. Confidential Information shall not be used by any person
granted access under this Protective Order for any purpose other than for use in this proceeding (including
any subsequent administrative or judicial review), shall not be used for competitive business purposes,
and shall not be used or disclosed except in accordance with this Order. This shall not preclude the use of
any material or information that is in the public domain or has been developed independently by any other
person who has not had access to the Confidential Information nor otherwise learned of its contents.
13.
Pleadings Using Confidential Information. Submitting Parties and Reviewing Parties may,
in any pleadings that they file in this proceeding, reference the Confidential Information, but only if they
comply with the following procedures:
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a. Any portions of the pleadings that contain or disclose Confidential Information must bephysically segregated from the remainder of the pleadings and filed under seal;
b. The portions containing or disclosing Confidential Information must be covered by a
separate letter referencing this Protective Order;
c. Each page of any Party’s filing that contains or discloses Confidential Information
subject to this Order must be clearly marked: “Confidential Information included pursuant to Protective
Order, [cite proceeding];” and
d. The confidential portion(s) of the pleading, to the extent they are required to be served,
shall be served upon the Secretary of the Commission, the Submitting Party, and those Reviewing Parties
that have signed the attached Declaration. Such confidential portions shall be served under seal, and shall
not be placed in the Commission’s Public File unless the Commission directs otherwise (with notice to
the Submitting Party and an opportunity to comment on such proposed disclosure). A Submitting Party
or a Reviewing Party filing a pleading containing Confidential Information shall also file a redacted copy
of the pleading containing no Confidential Information, which copy shall be placed in the Commission's
public files. A Submitting Party or a Reviewing Party may provide courtesy copies of pleadings
containing Confidential Information to Commission staff so long as the notations required by this
Paragraph 13 are not removed.
14.
Violations of Protective Order. Should a Reviewing Party that has properly obtained
access to Confidential Information under this Protective Order violate any of its terms, it shall
immediately convey that fact to the Commission and to the Submitting Party. Further, should such
violation consist of improper disclosure or use of Confidential Information, the violating party shall take
all necessary steps to remedy the improper disclosure or use. The Violating Party shall also immediately
notify the Commission and the Submitting Party, in writing, of the identity of each party known or
reasonably suspected to have obtained the Confidential Information through any such disclosure. The
Commission retains its full authority to fashion appropriate sanctions for violations of this Protective
Order, including but not limited to suspension or disbarment of attorneys from practice before the
Commission, forfeitures, cease and desist orders, and denial of further access to Confidential Information
in this or any other Commission proceeding. Nothing in this Protective Order shall limit any other rights
and remedies available to the Submitting Party at law or equity against any party using Confidential
Information in a manner not authorized by this Protective Order.
15.
Termination of Proceeding. Within two weeks after final resolution of this proceeding
(which includes any administrative or judicial appeals), Authorized Representatives of Reviewing Parties
shall, at the direction of the Submitting Party, destroy or return to the Submitting Party all Confidential
Information as well as all copies and derivative materials made, and shall certify in a writing served on
the Commission and the Submitting Party that no material whatsoever derived from such Confidential
Information has been retained by any person having access thereto, except that counsel to a Reviewing
Party may retain two copies of pleadings submitted on behalf of the Reviewing Party. Any confidential
information contained in any copies of pleadings retained by counsel to a Reviewing Party or in materials
that have been destroyed pursuant to this paragraph shall be protected from disclosure or use indefinitely
in accordance with Paragraphs 11 and 12 of this Protective Order unless such Confidential Information is
released from the restrictions of this Order either through agreement of the parties, or pursuant to the
order of the Commission or a court having jurisdiction.
16.
No Waiver of Confidentiality. Disclosure of Confidential Information as provided herein
shall not be deemed a waiver by the Submitting Party of any privilege or entitlement to confidential
treatment of such Confidential Information. Reviewing Parties, by viewing these materials: (a) agree not
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to assert any such waiver; (b) agree not to use information derived from any confidential materials to seekdisclosure in any other proceeding; and (c) agree that accidental disclosure of Confidential Information
shall not be deemed a waiver of the privilege.
17.
Additional Rights Preserved. The entry of this Protective Order is without prejudice to the
rights of the Submitting Party to apply for additional or different protection where it is deemed necessary
or to the rights of Reviewing Parties to request further or renewed disclosure of Confidential Information.
18.
Effect of Protective Order. This Protective Order constitutes an Order of the Commission
and an agreement between the Reviewing Party, executing the attached Declaration, and the Submitting
Party.
19.
Authority. This Protective Order is issued pursuant to Sections 4(i) and 4(j) of the
Communications Act as amended, 47 U.S.C. §§ 154(i), (j); 47 C.F.R. §§ 0.457(d) and 76.1003(k); and
Section 4 of the Freedom of Information Act, 5 U.S.C. § 552(b)(4).
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Attachment A to Standard Protective OrderDECLARATION
In the Matter of
)
)
[Name of Proceeding]
)
Docket No.________________
)
I, _____________________________, hereby declare under penalty of perjury that I
have read the Protective Order that has been entered by the Commission in this proceeding, and that I
agree to be bound by its terms pertaining to the treatment of Confidential Information submitted by
parties to this proceeding. I understand that the Confidential Information shall not be disclosed to anyone
except in accordance with the terms of the Protective Order and shall be used only for purposes of the
proceedings in this matter. I acknowledge that a violation of the Protective Order is a violation of an
order of the Federal Communications Commission. I acknowledge that this Protective Order is also a
binding agreement with the Submitting Party. I am not in a position to use the Confidential Information
for competitive commercial or business purposes, including competitive decision-making, and my
activities, association or relationship with the Reviewing Parties, Authorized Representatives, or other
persons does not involve rendering advice or participating in any or all of the Reviewing Parties’,
Authorized Representatives’ or other persons’ business decisions that are or will be made in light of
similar or corresponding information about a competitor.
(signed) __________________________
(printed name) _____________________
(representing) ______________________
(title) _____________________________
(employer) _________________________
(address) __________________________
(phone) ___________________________
(date) _____________________________
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APPENDIX J
Final Regulatory Flexibility Act Analysis
1.As required by the Regulatory Flexibility Act (“RFA”),1 an Initial Regulatory Flexibility
Analysis (“IRFA”) was incorporated in the Notice of Proposed Rulemaking (“NPRM”) in MB Docket
Nos. 12-68, 07-18, and 05-192.2 The Commission sought written public comment on the proposals in the
NPRM, including comment on the IRFA.3 The Organization for the Promotion and Advancement of
Small Telecommunications Companies and the National Telecommunications Cooperative Association
(collectively, “OPASTCO/NTCA”) filed comments directed toward the IRFA and these comments are
discussed below.4 This Final Regulatory Flexibility Analysis (“FRFA”) conforms to the RFA.
A.
Need for, and Objectives of, the Report and Order
2.In areas served by a cable operator, Section 628(c)(2)(D) of the Communications Act of
1934, as amended (the “Act”), generally prohibits exclusive contracts for satellite cable programming or
satellite broadcast programming between any cable operator and any cable-affiliated programming vendor
(the “exclusive contract prohibition”).5 The exclusive contract prohibition applies to all satellite-
delivered, cable-affiliated programming and preemptively bans all exclusive contracts for such
programming with cable operators, regardless of the popularity of the programming at issue.6 The
exclusive contract prohibition applies only to programming that is delivered via satellite; it does not apply
to programming delivered via terrestrial facilities.7 In Section 628(c)(5) of the Act, Congress provided
that the exclusive contract prohibition would cease to be effective on October 5, 2002, unless the
Commission found that it “continues to be necessary to preserve and protect competition and diversity in
the distribution of video programming.”8 On two previous occasions, first in 20029 and again in 2007,10
1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. § 601 et seq., has been amended by the Contract With America
Advancement Act of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
2 See NPRM, 27 FCC Rcd at 3507, Appendix E, ¶ 1.
3 See id.
4 See OPASTCO/NTCA Reply Comments at 4.
5 See 47 U.S.C. § 548(c)(2)(D).
6 See Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of
1992: Development of Competition and Diversity in Video Programming Distribution and Carriage, First Report
and Order, 8 FCC Rcd 3359, 3377-78, ¶¶ 47-49 (1993); see also Implementation of Sections 12 and 19 of the Cable
Television Consumer Protection and Competition Act of 1992: Development of Competition and Diversity in Video
Programming Distribution and Carriage, Memorandum Opinion and Order on Reconsideration of the First Report
and Order, 10 FCC Rcd 1902, 1930, ¶ 62 (1994).
7 Section 628(c)(2)(D) pertains only to “satellite cable programming” and “satellite broadcast programming.” See
47 U.S.C. § 548(c)(2)(D). Both terms are defined to include only programming transmitted or retransmitted by
satellite for reception by cable operators. See 47 U.S.C. § 548(i)(1) (incorporating the definition of “satellite cable
programming” as used in 47 U.S.C. § 605); id. § 548(i)(3). We refer to “satellite cable programming” and “satellite
broadcast programming” collectively as “satellite-delivered programming.”
8 47 U.S.C. § 548(c)(5).
9 See Implementation of the Cable Television Consumer Protection and Competition Act of 1992 – Development of
Competition and Diversity in Video Programming Distribution: Section 628(c)(5) of the Communications Act:
(continued….)
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the Commission renewed the prohibition for five years, with the latest extension expiring on October 5,2012. The NPRM initiated the third review of the necessity of the exclusive contract prohibition.
3.
The Report and Order concludes that the exclusive contract prohibition is no longer
necessary to preserve and protect competition and diversity in the distribution of video programming
considering that a case-by-case process will remain in place after the prohibition expires to assess the
impact of individual exclusive contracts. Accordingly, the Commission declines to extend the exclusive
contract prohibition beyond its October 5, 2012 sunset date. Post-sunset, the Commission will rely on
existing protections provided by the program access rules to protect multichannel video programming
distributors (“MVPDs”) in their efforts to compete in the video distribution market, including the case-by-
case consideration of exclusive contracts pursuant to Section 628(b) of the Act.
4.
The Report and Order extends the case-by-case complaint process previously adopted to
address Section 628(b) complaints involving terrestrially delivered, cable-affiliated programming to
Section 628(b) complaints challenging exclusive contracts involving satellite delivered, cable-affiliated
programming. Under this case-by-case process, the complainant will have the burden of proving that the
exclusive contract (i) is “unfair” based on the facts and circumstances presented; and (ii) has the “purpose
or effect” of “significantly hindering or preventing” the MVPD from providing satellite cable
programming or satellite broadcast programming in violation of Section 628(b). There will be a
rebuttable presumption that an exclusive contract involving a satellite-delivered, cable-affiliated Regional
Sports Network (“RSN”) has the purpose or effect set forth in Section 628(b). A defendant may
overcome this presumption by demonstrating that the exclusive contract does not have the purpose or
effect of significantly hindering or preventing the MVPD from providing satellite cable programming or
satellite broadcast programming. The Commission will analyze the HD version of a network separately
from the SD version of the network in evaluating whether an exclusive contract involving satellite-
delivered programming has the purpose or effect set forth in Section 628(b). In cases involving an RSN,
there will be a rebuttable presumption that an exclusive contract involving the HD version of the RSN
results in significant hindrance even if the complainant offers the SD version of the RSN to subscribers.
In addition to claims under Section 628(b) of the Act, additional causes of action under Section 628 will
continue to apply after expiration of the exclusive contract prohibition, including claims alleging undue
influence under Section 628(c)(2)(A) and claims alleging discrimination under Section 628(c)(2)(B).
5.
The Report and Order retains the exclusivity petition process, whereby a cable operator
or satellite-delivered, cable-affiliated programmer may file a Petition for Exclusivity seeking Commission
approval for an exclusive contract involving satellite-delivered, cable-affiliated programming by
demonstrating that the contract serves the public interest. Grant of a Petition for Exclusivity will
immunize an exclusive contract from potential complaints alleging a violation of Section 628(c)(2)(B) of
the Act, as required by the terms of Section 628(c)(2)(B)(iv).
6.
Finally, the Report and Order adopts a 45-day answer period for complaints alleging a
violation of Section 628(b); establishes a six-month deadline (calculated from the date of filing of the
complaint) for the Media Bureau to act on a complaint alleging a denial of programming; eliminates
restrictions on subdistribution agreements involving satellite-delivered, cable-affiliated programming in
served areas; determines that the rules applicable post-sunset to exclusive contracts between cable
Sunset of Exclusive Contract Prohibition, Report and Order, 17 FCC Rcd 12124, 12132, ¶ 20 (2002) (“2002
Extension Order”).
10 See Implementation of the Cable Television Consumer Protection and Competition Act of 1992 – Development of
Competition and Diversity in Video Programming Distribution: Section 628(c)(5) of the Communications Act:
Sunset of Exclusive Contract Prohibition, Report and Order, 22 FCC Rcd 17791 (2007) (“2007 Extension Order”),
aff’d sub nom. Cablevision Sys. Corp. et al. v. FCC, 597 F.3d 1306 (D.C. Cir. 2010) (“Cablevision I”).
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operators and satellite-delivered, cable-affiliated programmers will apply equally to common carriers andOpen Video Systems; and modifies the exclusivity conditions set forth in the Liberty Media Order11 to
conform those conditions to the Commission’s decision to decline to extend the exclusive contract
prohibition beyond its October 5, 2012 sunset date.
7.
The Order on Reconsideration in MB Docket No. 07-29 (i) affirms the expanded
discovery procedures for program access complaints adopted in the 2007 Extension Order; (ii) modifies
the standard protective order for use in program access complaint proceedings to include a provision
allowing a party to object to the disclosure of confidential information based on concerns about the
individual seeking access; and (iii) clarifies that a party may object to any request for documents that are
protected from disclosure by the attorney-client privilege, the work-product doctrine, or other recognized
protections from disclosure.
B.
Summary of Significant Issues Raised by Public Comments in Response to the IRFA
8.OPASTCO/NTCA filed comments specifically directed toward the IRFA. In addition,
several other commenters addressed the effects of the expiration of the exclusive contract prohibition on
small businesses in their comments. OPASTCO/NTCA argues that expiration of the exclusive contract
prohibition would have a particularly harmful impact on small and rural MVPDs, which lack the
resources to produce alternative programming or engage in effective counter-measures.12 Therefore,
OPASTCO/NTCA argues, “it is particularly imperative to extend the exclusive contract prohibition to
avoid the disproportionate consequences that the rule’s expiration would impose on the markets served by
small MVPDs.”13 Several commenters also argue that small MVPDs do not have the resources to litigate
complaints involving exclusive contracts on a case-by-case basis.14
9.
The Report and Order concludes that the case-by-case approach for considering
exclusive contracts will be sufficient to protect MVPDs, including small, rural, and new entrant MVPDs,
in their efforts to compete. The Report and Order also finds that the following additional factors will
mitigate the risk of any potentially adverse impact of the expiration of the exclusive contract prohibition:
(i) a significant percentage of satellite-delivered, cable-affiliated programming is subject until January
2018 to program access merger conditions adopted in the Comcast/NBCU Order, which require
Comcast/NBCU to make these networks available to competitors even after the expiration of the
exclusive contract prohibition; (ii) the Commission expects that any enforcement of exclusive contracts in
the near term will be limited by the terms of existing affiliation agreements; (iii) even after the expiration
of the exclusive contract prohibition, a satellite-delivered, cable-affiliated programmer’s refusal to license
its content to a particular MVPD (such as a small, rural, or new entrant MVPD), while simultaneously
licensing its content to other MVPDs competing in the same geographic area, will continue to be a
violation of the discrimination provision in Section 628(c)(2)(B), unless the programmer can establish a
“legitimate business reason” for the conduct in response to a program access complaint challenging the
conduct; and (iv) if the expiration of the exclusive contract prohibition results in harm to consumers or
competition, the Commission has statutory authority pursuant to Section 628(b) of the Act to take
11 See Applications for Consent to the Assignment and/or Transfer of Control of Licenses, News Corporation. and
The DIRECTV Group, Inc., Transferors, to Liberty Media Corporation., Transferee, Memorandum Opinion and
Order, 23 FCC Rcd 3265, 3340-41, Appendix B, § III (2008).
12 See OPASTCO/NTCA Reply Comments at 4; see also OPASTCO/NTCA Comments at 5; Blooston Rural Video
Providers at 6; USTelecom at 14-15.
13 OPASTCO/NTCA Reply Comments at 4.
14 See CenturyLink Comments at 19-20; ITTA Comments at 2-3, 7 n.17, 9-10; Iowa Telco Comments at 5;
OPASTCO/NTCA Comments at 7; USTelecom Comments at 13-14.
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remedial action by adopting rules, including a prohibition on certain types of exclusive contractsinvolving cable-affiliated programming, to address these concerns.
10.
Moreover, the Report and Order notes that certain factors will help to minimize the costs
of the complaint process. The Report and Order establishes a rebuttable presumption that an exclusive
contract involving a satellite-delivered, cable-affiliated RSN has the purpose or effect set forth in Section
628(b). This presumption will reduce costs by eliminating the need for litigants and the Commission to
undertake repetitive examinations of Commission precedent and empirical evidence on RSNs. Moreover,
the Report and Order establishes a six-month deadline (calculated from the date of filing of the
complaint) for the Media Bureau to act on a complaint alleging a denial of programming. In addition, to
the extent that MVPDs are concerned with the costs of pursuing a program access complaint, they may
seek to join with other MVPDs in pursuing a complaint.
C.
Description and Estimate of the Number of Small Entities to Which Rules
Will Apply
The RFA directs agencies to provide a description of, and, where feasible, an estimate of,
the number of small entities that may be affected by the rules adopted herein.15 The RFA generally
defines the term “small entity” as having the same meaning as the terms “small business,” “small
organization,” and “small governmental jurisdiction.”16 In addition, the term “small business” has the
same meaning as the term “small business concern” under the Small Business Act.17 A “small business
concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the Small Business Administration
(SBA).18 Below, we provide a description of such small entities, as well as an estimate of the number of
such small entities, where feasible.
12.
Wired Telecommunications Carriers. The 2007 North American Industry Classification
System (“NAICS”) defines “Wired Telecommunications Carriers” as follows: “This industry comprises
establishments primarily engaged in operating and/or providing access to transmission facilities and
infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using
wired telecommunications networks. Transmission facilities may be based on a single technology or a
combination of technologies. Establishments in this industry use the wired telecommunications network
facilities that they operate to provide a variety of services, such as wired telephony services, including
VoIP services; wired (cable) audio and video programming distribution; and wired broadband Internet
services. By exception, establishments providing satellite television distribution services using facilities
and infrastructure that they operate are included in this industry.”19 The SBA has developed a small
business size standard for wireline firms within the broad economic census category, “Wired
Telecommunications Carriers.”20 Under this category, the SBA deems a wireline business to be small if it
15 5 U.S.C. § 604(a)(4).
16 5 U.S.C. § 601(6).
17 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business
Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.” 5 U.S.C. § 601(3).
18 15 U.S.C. § 632.
19 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
20 13 C.F.R. § 121.201, 2007 NAICS code 517110.
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has 1,500 or fewer employees.21 Census Bureau data for 2007, which now supersede data from the 2002Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total,
3,144 had employment of 999 or fewer, and 44 firms had employment of 1,000 employees or more. Thus
under this category and the associated small business size standard, the majority of these firms can be
considered small.22
13.
Cable Television Distribution Services. Since 2007, these services have been defined
within the broad economic census category of Wired Telecommunications Carriers; that category is
defined above. The SBA has developed a small business size standard for this category, which is: All
such firms having 1,500 or fewer employees.23 Census Bureau data for 2007, which now supersede data
from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year.
Of this total, 3,144 had employment of 999 or fewer, and 44 firms had employment of 1,000 employees
or more. Thus under this category and the associated small business size standard, the majority of these
firms can be considered small.24
14.
Cable Companies and Systems. The Commission has also developed its own small
business size standards, for the purpose of cable rate regulation. Under the Commission’s rules, a “small
cable company” is one serving 400,000 or fewer subscribers nationwide.25 Industry data indicate that all
but ten cable operators nationwide are small under this size standard.26 In addition, under the
Commission’s rules, a “small system” is a cable system serving 15,000 or fewer subscribers.27 Industry
data indicate that, of 6,101 systems nationwide, 4,410 systems have under 10,000 subscribers, and an
additional 258 systems have 10,000-19,999 subscribers.28 Thus, under this standard, most cable systems
are small.
15.
Cable System Operators. The Communications Act of 1934, as amended, also contains a
size standard for small cable system operators, which is “a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not
affiliated with any entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.”29 The Commission has determined that an operator serving fewer than 677,000
subscribers shall be deemed a small operator if its annual revenues, when combined with the total annual
revenues of all its affiliates, do not exceed $250 million in the aggregate.30 Industry data indicate that all
21 See id.
22 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
23 13 C.F.R. § 121.201, 2007 NAICS code 517110.
24 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
25 47 C.F.R. § 76.901(e). The Commission determined that this size standard equates approximately to a size
standard of $100 million or less in annual revenues. Implementation of Sections of the 1992 Cable Act: Rate
Regulation, Sixth Report and Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).
26 See BROADCASTING & CABLE YEARBOOK 2010 at C-2 (2009) (data current as of Dec. 2008).
27 47 C.F.R. § 76.901(c).
28See TELEVISION & CABLE FACTBOOK 2009 at F-2 (2009) (data current as of Oct. 2008). The data do not include
957 systems for which classifying data were not available.
29 47 U.S.C. § 543(m)(2); see 47 C.F.R. § 76.901(f) & nn. 1-3.
30 47 C.F.R. § 76.901(f); see FCC Announces New Subscriber Count for the Definition of Small Cable Operator,
Public Notice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).
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but nine cable operators nationwide are small under this subscriber size standard.31 We note that theCommission neither requests nor collects information on whether cable system operators are affiliated
with entities whose gross annual revenues exceed $250 million,32 and therefore we are unable to estimate
more accurately the number of cable system operators that would qualify as small under this size
standard.
16.
Direct Broadcast Satellite (“DBS”) Service. DBS service is a nationally distributed
subscription service that delivers video and audio programming via satellite to a small parabolic “dish”
antenna at the subscriber’s location. DBS, by exception, is now included in the SBA’s broad economic
census category, “Wired Telecommunications Carriers,”33 which was developed for small wireline firms.
Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees.34
Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were
3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999
or fewer, and 44 firms had employment of 1,000 employees or more. Thus under this category and the
associated small business size standard, the majority of these firms can be considered small.35 Currently,
only two entities provide DBS service, which requires a great investment of capital for operation:
DIRECTV and DISH Network).36 Each currently offers subscription services. DIRECTV37 and DISH
Network38 each report annual revenues that are in excess of the threshold for a small business. Because
DBS service requires significant capital, we believe it is unlikely that a small entity as defined by the
SBA would have the financial wherewithal to become a DBS service provider.
17.
Satellite Master Antenna Television (SMATV) Systems, also known as Private Cable
Operators (PCOs). SMATV systems or PCOs are video distribution facilities that use closed
transmission paths without using any public right-of-way. They acquire video programming and
distribute it via terrestrial wiring in urban and suburban multiple dwelling units such as apartments and
condominiums, and commercial multiple tenant units such as hotels and office buildings. SMATV
systems or PCOs are now included in the SBA’s broad economic census category, “Wired
Telecommunications Carriers,”39 which was developed for small wireline firms. Under this category, the
SBA deems a wireline business to be small if it has 1,500 or fewer employees.40 Census Bureau data for
31 See BROADCASTING & CABLE YEARBOOK 2010 at C-2 (2009) (data current as of Dec. 2008).
32 The Commission does receive such information on a case-by-case basis if a cable operator appeals a local
franchise authority’s finding that the operator does not qualify as a small cable operator pursuant to § 76.901(f) of
the Commission’s rules. See 47 C.F.R. § 76.901(f).
33 See 13 C.F.R. § 121.201, 2007 NAICS code 517110. The 2007 NAICS definition of the category of “Wired
Telecommunications Carriers” is in paragraph 12, above.
34 13 C.F.R. § 121.201, 2007 NAICS code 517110.
35 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
36 See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming,
Fourteenth Annual Report, FCC 12-81, ¶ 31 (2012) (“14th Annual Report”).
37 As of December 2010, DIRECTV is the largest DBS operator and the second largest MVPD, serving an estimated
19% of MVPD subscribers nationwide. See id. at Table 5; see also supra App. E at n. 9.
38 As of December 2010, DISH Network is the second largest DBS operator and the third largest MVPD, serving an
estimated 14% of MVPD subscribers nationwide. See 14th Annual Report at Table 5; see also supra App. E at n. 9.
39 13 C.F.R. § 121.201, 2007 NAICS code 517110.
40 See id.
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2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this categorythat operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. Thus, under this category and the associated small business
size standard, the majority of these firms can be considered small.41
18.
Home Satellite Dish (“HSD”) Service. HSD or the large dish segment of the satellite
industry is the original satellite-to-home service offered to consumers, and involves the home reception of
signals transmitted by satellites operating generally in the C-band frequency. Unlike DBS, which uses
small dishes, HSD antennas are between four and eight feet in diameter and can receive a wide range of
unscrambled (free) programming and scrambled programming purchased from program packagers that
are licensed to facilitate subscribers’ receipt of video programming. Because HSD provides subscription
services, HSD falls within the SBA-recognized definition of Wired Telecommunications Carriers.42 The
SBA has developed a small business size standard for this category, which is: all such firms having 1,500
or fewer employees.43 Census Bureau data for 2007, which now supersede data from the 2002 Census,
show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had
employment of 999 or fewer, and 44 firms had employment of 1,000 employees or more. Thus, under
this category and the associated small business size standard, the majority of these firms can be
considered small.44
19.
Broadband Radio Service and Educational Broadband Service. Broadband Radio
Service systems, previously referred to as Multipoint Distribution Service (MDS) and Multichannel
Multipoint Distribution Service (MMDS) systems, and “wireless cable,” transmit video programming to
subscribers and provide two-way high speed data operations using the microwave frequencies of the
Broadband Radio Service (BRS) and Educational Broadband Service (EBS) (previously referred to as the
Instructional Television Fixed Service (ITFS)).45 In connection with the 1996 BRS auction, the
Commission established a small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three calendar years.46 The BRS auctions resulted
in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67
auction winners, 61 met the definition of a small business. BRS also includes licensees of stations
authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction
winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA
authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities.47
After adding the number of small business auction licensees to the number of incumbent licensees not
41 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
42 13 C.F.R. § 121.201, 2007 NAICS code 517110.
43 See id.
44 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
45 Amendment of Parts 21 and 74 of the Commission’s Rules with Regard to Filing Procedures in the Multipoint
Distribution Service and in the Instructional Television Fixed Service and Implementation of Section 309(j) of the
Communications Act—Competitive Bidding, MM Docket No. 94-131, PP Docket No. 93-253, Report and Order, 10
FCC Rcd 9589, 9593, ¶ 7 (1995).
46 47 C.F.R. § 21.961(b)(1).
47 47 U.S.C. § 309(j). Hundreds of stations were licensed to incumbent MDS licensees prior to implementation of
Section 309(j) of the Communications Act of 1934, 47 U.S.C. § 309(j). For these pre-auction licenses, the
applicable standard is SBA’s small business size standard of 1500 or fewer employees.
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already counted, we find that there are currently approximately 440 BRS licensees that are defined assmall businesses under either the SBA or the Commission’s rules. In 2009, the Commission conducted
Auction 86, the sale of 78 licenses in the BRS areas.48 The Commission offered three levels of bidding
credits: (i) a bidder with attributed average annual gross revenues that exceed $15 million and do not
exceed $40 million for the preceding three years (small business) received a 15 percent discount on its
winning bid; (ii) a bidder with attributed average annual gross revenues that exceed $3 million and do not
exceed $15 million for the preceding three years (very small business) received a 25 percent discount on
its winning bid; and (iii) a bidder with attributed average annual gross revenues that do not exceed $3
million for the preceding three years (entrepreneur) received a 35 percent discount on its winning bid.49
Auction 86 concluded in 2009 with the sale of 61 licenses.50 Of the ten winning bidders, two bidders that
claimed small business status won 4 licenses; one bidder that claimed very small business status won
three licenses; and two bidders that claimed entrepreneur status won six licenses.
20.
In addition, the SBA’s Cable Television Distribution Services small business size
standard is applicable to EBS. There are presently 2,032 EBS licensees. All but 100 of these licenses are
held by educational institutions. Educational institutions are included in this analysis as small entities.51
Thus, we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Television
Distribution Services have been defined within the broad economic census category of Wired
Telecommunications Carriers; that category is defined as follows: “This industry comprises
establishments primarily engaged in operating and/or providing access to transmission facilities and
infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using
wired telecommunications networks. Transmission facilities may be based on a single technology or a
combination of technologies.”52 The SBA has developed a small business size standard for this category,
which is: all such firms having 1,500 or fewer employees.53 Census Bureau data for 2007, which now
supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for
the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had employment of
1,000 employees or more. Thus, under this category and the associated small business size standard, the
majority of these firms can be considered small.54
21.
Fixed Microwave Services. Microwave services include common carrier,55 private-
operational fixed,56 and broadcast auxiliary radio services.57 They also include the Local Multipoint
48 Auction of Broadband Radio Service (BRS) Licenses, Scheduled for October 27, 2009, Notice and Filing
Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 86, Public Notice, 24
FCC Rcd 8277 (2009).
49 Id. at 8296.
50 Auction of Broadband Radio Service Licenses Closes, Winning Bidders Announced for Auction 86, Down
Payments Due November 23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to Deny Period,
Public Notice, 24 FCC Rcd 13572 (2009).
51 The term “small entity” within SBREFA applies to small organizations (nonprofits) and to small governmental
jurisdictions (cities, counties, towns, townships, villages, school districts, and special districts with populations of
less than 50,000). 5 U.S.C. §§ 601(4)–(6). We do not collect annual revenue data on EBS licensees.
52 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers,” (partial
definition), www.census.gov/naics/2007/def/ND517110.HTM#N517110.
53 13 C.F.R. § 121.201, 2007 NAICS code 517110.
54 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
55 See 47 C.F.R. Part 101, Subparts C and I.
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Distribution Service (LMDS),58 the Digital Electronic Message Service (DEMS),59 and the 24 GHzService,60 where licensees can choose between common carrier and non-common carrier status.61 At
present, there are approximately 31,428 common carrier fixed licensees and 79,732 private operational-
fixed licensees and broadcast auxiliary radio licensees in the microwave services. There are
approximately 120 LMDS licensees, three DEMS licensees, and three 24 GHz licensees. The
Commission has not yet defined a small business with respect to microwave services. For purposes of the
IRFA, we will use the SBA’s definition applicable to Wireless Telecommunications Carriers (except
satellite)—i.e., an entity with no more than 1,500 persons.62 Under the present and prior categories, the
SBA has deemed a wireless business to be small if it has 1,500 or fewer employees.63 For the category of
Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede data
contained in the 2002 Census, show that there were 1,383 firms that operated that year.64 Of those 1,383,
1,368 had fewer than 1000 employees, and 15 firms had 1000 employees or more. Thus under this
category and the associated small business size standard, the majority of firms can be considered small.
We note that the number of firms does not necessarily track the number of licensees. We estimate that
virtually all of the Fixed Microwave licensees (excluding broadcast auxiliary licensees) would qualify as
small entities under the SBA definition.
22.
Open Video Systems. The open video system (“OVS”) framework was established in
1996, and is one of four statutorily recognized options for the provision of video programming services
by local exchange carriers.65 The OVS framework provides opportunities for the distribution of video
programming other than through cable systems. Because OVS operators provide subscription services,66
OVS falls within the SBA small business size standard covering cable services, which is “Wired
Telecommunications Carriers.”67 The SBA has developed a small business size standard for this
56 See 47 C.F.R. Part 101, Subparts C and H.
57 Auxiliary Microwave Service is governed by Part 74 of Title 47 of the Commission’s Rules. See 47 C.F.R. Part
74. Available to licensees of broadcast stations and to broadcast and cable network entities, broadcast auxiliary
microwave stations are used for relaying broadcast television signals from the studio to the transmitter, or between
two points such as a main studio and an auxiliary studio. The service also includes mobile TV pickups, which relay
signals from a remote location back to the studio.
58 See 47 C.F.R. Part 101, Subpart L.
59 See 47 C.F.R. Part 101, Subpart G.
60 See id.
61 See 47 C.F.R. §§ 101.533, 101.1017.
62 13 C.F.R. § 121.201, 2007 NAICS code 517210.
63 See id. The now-superseded, pre-2007 C.F.R. citations were 13 C.F.R. § 121.201, NAICS codes 517211 and
517212 (referring to the 2002 NAICS).
64 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009);
http://www.census.gov/econ/industry/ec07/a517210.htm (Subject Series: Establishment and Firm Size (national) –
Table 5: Employment Size of Firms for the U.S).
65 47 U.S.C. § 571(a)(3)-(4); see Implementation of Section 19 of the 1992 Cable Act and Annual Assessment of the
Status of Competition in the Market for the Delivery of Video Programming, Thirteenth Report, 24 FCC Rcd 542,
606, ¶ 135 (2009) (”13th Annual Report”).
66 See 47 U.S.C. § 573.
67 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
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category, which is: all such firms having 1,500 or fewer employees.68 Census Bureau data for 2007,which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that
operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. Thus, under this category and the associated small business
size standard, the majority of these firms can be considered small.69 In addition, we note that the
Commission has certified approximately 42 OVS operators, with some now providing service.70
Broadband service providers (“BSPs”) are currently the only significant holders of OVS certifications or
local OVS franchises.71 Affiliates of Residential Communications Network, Inc. (“RCN”) received
approval to operate OVS systems in New York City, Boston, Washington, D.C., and other areas. RCN
has sufficient revenues to assure that they do not qualify as a small business entity. The Commission
does not have financial or employment information regarding the other entities authorized to provide
OVS, some of which may not yet be operational. Thus, up to 41 of the OVS operators may qualify as
small entities.
23.
Cable and Other Subscription Programming. The Census Bureau defines this category
as follows: “This industry comprises establishments primarily engaged in operating studios and facilities
for the broadcasting of programs on a subscription or fee basis . . . . These establishments produce
programming in their own facilities or acquire programming from external sources. The programming
material is usually delivered to a third party, such as cable systems or direct-to-home satellite systems, for
transmission to viewers.”72 The SBA has developed a small business size standard for this category,
which is: all such firms having $15 million dollars or less in annual revenues.73 To gauge small business
prevalence in the Cable and Other Subscription Programming industries, the Commission relies on data
currently available from the U.S. Census for the year 2007. Census Bureau data for 2007, which now
supersede data from the 2002 Census, show that there were 396 firms in this category that operated for
the entire year.74 Of that number, 325 operated with annual revenues of $ 9,999,999 dollars or less.75
Seventy-one (71) operated with annual revenues of between $10 million and $100 million or more.76
Thus, under this category and associated small business size standard, the majority of firms can be
considered small.
24.
Small Incumbent Local Exchange Carriers. We have included small incumbent local
exchange carriers in this present RFA analysis. A “small business” under the RFA is one that, inter alia,
meets the pertinent small business size standard (e.g., a telephone communications business having 1,500
68 13 C.F.R. § 121.201, 2007 NAICS code 517110.
69 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
70 A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html.
71 See 13th Annual Report, 24 FCC Rcd at 606, ¶ 135. BSPs are newer firms that are building state-of-the-art,
facilities-based networks to provide video, voice, and data services over a single network.
72 U.S. Census Bureau, 2007 NAICS Definitions, “515210 Cable and Other Subscription Programming”;
http://www.census.gov/naics/2007/def/ND515210.HTM#N515210.
73 13 C.F.R. § 121.201, 2007 NAICS code 515210.
74 See http://www.census.gov/econ/industry/ec07/a515210.htm (Subject Series: Establishment and Firm Size
(national) – Table 4: Revenue Size of Firms for the U.S).
75 Id.
76 Id.
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or fewer employees), and “is not dominant in its field of operation.”77 The SBA’s Office of Advocacycontends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field
of operation because any such dominance is not “national” in scope.78 We have therefore included small
incumbent local exchange carriers in this RFA analysis, although we emphasize that this RFA action has
no effect on Commission analyses and determinations in other, non-RFA contexts.
25.
Incumbent Local Exchange Carriers (“LECs”). Neither the Commission nor the SBA
has developed a small business size standard specifically for incumbent local exchange services. The
appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under
that size standard, such a business is small if it has 1,500 or fewer employees.79 Census Bureau data for
2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category
that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. According to Commission data, 1,307 carriers reported that
they were incumbent local exchange service providers.80 Of these 1,307 carriers, an estimated 1,006 have
1,500 or fewer employees and 301 have more than 1,500 employees.81 Thus, under this category and the
associated small business size standard, the majority of these firms can be considered small.82
26.
Competitive Local Exchange Carriers, Competitive Access Providers (CAPs), “Shared-
Tenant Service Providers,” and “Other Local Service Providers.” Neither the Commission nor the SBA
has developed a small business size standard specifically for these service providers. The appropriate size
standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.83 Census Bureau data for 2007,
which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that
operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. Thus, under this category and the associated small business
size standard, the majority of these firms can be considered small.84 Consequently, the Commission
estimates that most providers of competitive local exchange service, competitive access providers,
“Shared-Tenant Service Providers,” and “Other Local Service Providers” are small entities.
27.
Motion Picture and Video Production. The Census Bureau defines this category as
follows: “This industry comprises establishments primarily engaged in producing, or producing and
77 15 U.S.C. § 632.
78 Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27,
1999). The Small Business Act contains a definition of “small-business concern,” which the RFA incorporates into
its own definition of “small business.” See 15 U.S.C. § 632(a) (Small Business Act); 5 U.S.C. § 601(3) (RFA).
SBA regulations interpret “small business concern” to include the concept of dominance on a national basis. See 13
C.F.R. § 121.102(b).
79 13 C.F.R. § 121.201, 2007 NAICS code 517110.
80 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (“Trends in Telephone Service”).
81 See id.
82 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
83 13 C.F.R. § 121.201, 2007 NAICS code 517110.
84 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
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distributing motion pictures, videos, television programs, or television commercials.”85 We note thatfirms in this category may be engaged in various industries, including cable programming. Specific
figures are not available regarding how many of these firms produce and/or distribute programming for
cable television. The SBA has developed a small business size standard for this category, which is: all
such firms having $29.5 million dollars or less in annual revenues.86 To gauge small business prevalence
in the Motion Picture and Video Production industries, the Commission relies on data currently available
from the U.S. Census for the year 2007. Census Bureau data for 2007, which now supersede data from
the 2002 Census, show that there were 9,095 firms in this category that operated for the entire year.87 Of
these, 8995 had annual receipts of $24,999,999 or less, and 100 had annual receipts ranging from not less
that $25,000,000 to $100,000,000 or more.88 Thus, under this category and associated small business size
standard, the majority of firms can be considered small.
28.
Motion Picture and Video Distribution. The Census Bureau defines this category as
follows: “This industry comprises establishments primarily engaged in acquiring distribution rights and
distributing film and video productions to motion picture theaters, television networks and stations, and
exhibitors.”89 We note that firms in this category may be engaged in various industries, including cable
programming. Specific figures are not available regarding how many of these firms produce and/or
distribute programming for cable television. The SBA has developed a small business size standard for
this category, which is: all such firms having $29.5 million dollars or less in annual revenues.90 To gauge
small business prevalence in the Motion Picture and Video Distribution industries, the Commission relies
on data currently available from the U.S. Census for the year 2007. Census Bureau data for 2007, which
now supersede data from the 2002 Census, show that there were 450 firms in this category that operated
for the entire year.91 Of these, 434 had annual receipts of $24,999,999 or less, and 16 had annual receipts
ranging from not less that $25,000,000 to $100,000,000 or more.92 Thus, under this category and
associated small business size standard, the majority of firms can be considered small.
D.
Description of Reporting, Recordkeeping, and Other Compliance
Requirements
Following the expiration of the exclusive contract prohibition, the Commission will rely
on existing protections in the program access rules to protect MVPDs in their efforts to compete in the
video distribution market. An MVPD will have the option to file a complaint with the Commission
alleging that an exclusive contract between a cable operator and a satellite-delivered, cable-affiliated
programmer involving satellite-delivered, cable-affiliated programming violates Section 628(b) of the
Act. The Report and Order extends the case-by-case complaint process previously adopted by the
85 U.S. Census Bureau, 2007 NAICS Definitions, “51211 Motion Picture and Video Production”;
http://www.census.gov/naics/2007/def/NDEF512.HTM#N51211.
86 13 C.F.R. § 121.201, 2007 NAICS code 512110.
87 See http://www.census.gov/econ/industry/ec07/a51211.htm (Subject Series: Establishment and Firm Size
(national) – Table 4: Revenue Size of Firms for the U.S).
88 Id.
89 See U.S. Census Bureau, 2007 NAICS Definitions, “51212 Motion Picture and Video Distribution”;
http://www.census.gov/naics/2007/def/NDEF512.HTM#N51212.
90 13 C.F.R. § 121.201, 2007 NAICS code 512120.
91 See http://www.census.gov/econ/industry/ec07/a51212.htm (Subject Series: Establishment and Firm Size
(national) – Table 4: Revenue Size of Firms for the U.S).
92 Id.
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Commission to address unfair acts involving terrestrially delivered, cable-affiliated programming thatallegedly violate Section 628(b) to Section 628(b) complaints challenging exclusive contracts involving
satellite-delivered, cable-affiliated programming. In addition to claims under Section 628(b) of the Act,
additional causes of action under Section 628 will continue to apply after expiration of the exclusive
contract prohibition, including claims alleging undue influence under Section 628(c)(2)(A) and claims
alleging discrimination under Section 628(c)(2)(B). The Report and Order also adopts a 45-day answer
period in complaint proceedings alleging a violation of Section 628(b) and establishes a six-month
deadline (calculated from the date of filing of the complaint) for the Media Bureau to act on a complaint
alleging a denial of programming. Moreover, the Order on Reconsideration (i) modifies the standard
protective order for use in program access complaint proceedings to include a provision allowing a party
to object to the disclosure of confidential information based on concerns about the individual seeking
access; and (ii) clarifies that a party may object to any request for documents that are protected from
disclosure by the attorney-client privilege, the work-product doctrine, or other recognized protections
from disclosure.
E.
Steps Taken to Minimize Significant Impact on Small Entities and
Significant Alternatives Considered
The RFA requires an agency to describe any significant alternatives that it has considered
in developing its approach, which may include the following four alternatives (among others): “(1) the
establishment of differing compliance or reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification, consolidation, or simplification of compliance
and reporting requirements under the rule for such small entities; (3) the use of performance rather than
design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small
entities.”93 The NPRM invited comment on issues that had the potential to have significant impact on
some small entities.94
31.
In the Report and Order, the Commission declines to extend the exclusive contract
prohibition beyond its October 5, 2012 sunset date. The Commission will instead rely on existing
protections in the program access rules to protect MVPDs, including small entities, in their efforts to
compete in the video distribution market. Small MVPDs will have the option to file a complaint alleging
that an exclusive contract between a cable operator and a satellite-delivered, cable-affiliated programmer
involving satellite-delivered, cable-affiliated programming violates Section 628(b) of the Act. In addition
to claims under Section 628(b) of the Act, additional causes of action under Section 628 will continue to
apply after expiration of the exclusive contract prohibition, including claims alleging undue influence
under Section 628(c)(2)(A) and claims alleging discrimination under Section 628(c)(2)(B).
32.
The Report and Order notes that certain factors will help to minimize the costs of the
complaint process. The Report and Order establishes a rebuttable presumption that an exclusive contract
involving a satellite-delivered, cable-affiliated RSN has the purpose or effect set forth in Section 628(b).
This presumption will reduce costs by eliminating the need for litigants and the Commission to undertake
repetitive examinations of Commission precedent and empirical evidence on RSNs. Moreover, the
Report and Order establishes a six-month deadline (calculated from the date of filing of the complaint)
for the Media Bureau to act on a complaint alleging a denial of programming. To the extent that MVPDs
are concerned with the costs of pursuing a program access complaint, they may seek to join with other
MVPDs in pursuing a complaint.
93 5 U.S.C. § 603(c)(1) – (c)(4).
94 See NPRM, 27 FCC Rcd at 3507, Appendix E, ¶ 1.
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33.Finally, the Report and Order revises the procedural rules for program access complaints
to adopt a 45-day answer period for complaints alleging a violation of Section 628(b). The standard
answer period for other program access complaints is only 20 days. Small entities may benefit from a
lengthier 45-day period within which to file an answer.
34.
The Order on Reconsideration (i) modifies the standard protective order for use in
program access complaint proceedings to include a provision allowing a party to object to the disclosure
of confidential information based on concerns about the individual seeking access; and (ii) clarifies that a
party may object to any request for documents that are protected from disclosure by the attorney-client
privilege, the work-product doctrine, or other recognized protections from disclosure. Small entities may
benefit from having the right to object to the disclosure of confidential information.
F.
Report to Congress
35.The Commission will send a copy of the Report and Order in MB Docket Nos. 12-68,
07-18, and 05-192, and Order on Reconsideration in MB Docket No. 07-29, including this FRFA, in a
report to be sent to Congress and the Government Accountability Office pursuant to the Congressional
Review Act.95 In addition, the Commission will send a copy of the Report and Order in MB Docket Nos.
12-68, 07-18, and 05-192, and Order on Reconsideration in MB Docket No. 07-29, including this FRFA,
to the Chief Counsel for Advocacy of the SBA. A copy of the Report and Order in MB Docket Nos. 12-
68, 07-18, and 05-192, the Order on Reconsideration in MB Docket No. 07-29, and FRFA (or summaries
thereof) will also be published in the Federal Register.96
95 See 5 U.S.C. § 801(a)(1)(A).
96 See 5 U.S.C. § 604(b).
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APPENDIX K
Initial Regulatory Flexibility Act Analysis
1.As required by the Regulatory Flexibility Act of 1980, as amended (“RFA”),1 the
Commission has prepared this present Initial Regulatory Flexibility Analysis (“IRFA”) concerning the
possible significant economic impact on small entities by the policies and rules proposed in the Further
Notice of Proposed Rulemaking (“FNPRM”). Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments
provided on the first page of the FNPRM. The Commission will send a copy of the FNPRM, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (“SBA”).2 In
addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register.3
A.
Need for, and Objectives of, the Proposed Rule Changes
129.We seek comment in the FNPRM on whether to establish a rebuttable presumption that
an exclusive contract for a cable-affiliated Regional Sports Network (“RSN”) (regardless of whether it is
terrestrially delivered or satellite-delivered) is an “unfair act” under Section 628(b) of the
Communications Act of 1934, as amended (the “Act”).4 Under the case-by-case process for complaints
alleging that an exclusive contract violates Section 628(b), the complainant has the burden of proving that
the exclusive contract at issue (i) is an “unfair act” and (ii) has the “purpose or effect” of “significantly
hindering or preventing” the complainant from providing satellite cable programming or satellite
broadcast programming. With respect to the second element, the Commission has established a rebuttable
presumption that an exclusive contract involving a cable-affiliated RSN has the “purpose or effect” of
“significantly hindering or preventing” the complainant from providing satellite cable programming or
satellite broadcast programming, as set forth in Section 628(b). With respect to the first element (the
“unfair act” element), however, the Commission has not established a rebuttable presumption that an
exclusive contract involving a cable-affiliated RSN is an “unfair act.” The FNPRM seeks comment on
whether to establish this rebuttable presumption.
2.
We also seek comment in the FNPRM on whether to establish a rebuttable presumption
that a complainant challenging an exclusive contract involving a cable-affiliated RSN (regardless of
whether it is terrestrially delivered or satellite-delivered) is entitled to a standstill of an existing
programming contract during the pendency of a complaint. The Commission previously established a
process whereby a complainant may seek a standstill of an existing programming contract during the
pendency of a complaint.5 The complainant has the burden of proof to demonstrate how grant of the
standstill will meet the following four criteria: (i) the complainant is likely to prevail on the merits of its
complaint; (ii) the complainant will suffer irreparable harm absent a stay; (iii) grant of a stay will not
substantially harm other interested parties; and (iv) the public interest favors grant of a stay. The FNPRM
seeks comment on whether to establish a rebuttable presumption that a complainant is entitled to a
standstill when challenging an exclusive contract involving a cable-affiliated RSN.
1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601 – 612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2 See 5 U.S.C. § 603(a).
3 See id.
4 See 47 U.S.C. § 548(b).
5 See 47 C.F.R. § 76.1003(l).
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3.The FNPRM also seeks comment on whether to establish rebuttable presumptions with
respect to the “unfair act” element and/or the “significant hindrance” element of a Section 628(b) claim
challenging an exclusive contract involving a cable-affiliated “national sports network” (regardless of
whether it is terrestrially delivered or satellite-delivered). We also seek comment in the FNPRM on
whether the Commission should establish a rebuttable presumption that, once a complainant succeeds in
demonstrating that an exclusive contract involving a cable-affiliated network (regardless of whether it is
terrestrially delivered or satellite-delivered) violates Section 628(b) (or, potentially, Section
628(c)(2)(B)), any other exclusive contract involving the same network violates Section 628(b) (or
Section 628(c)(2)(B)).
4.
We also solicit comment on modifications to the program access rules relating to buying
groups proposed by the American Cable Association (“ACA”) in its comments on the Notice of Proposed
Rulemaking in MB Docket Nos. 12-68, 07-18, and 05-182.6 ACA asserts that revisions to the program
access rules are needed to ensure that buying groups utilized by small and medium-sized multi-channel
video programming distributors (“MVPDs”) can avail themselves of the non-discrimination protections of
the program access rules.7 ACA seeks three modifications to the program access rules: (i) the revision of
the definition of “buying group” to accurately reflect the level of liability assumed by buying groups
under current industry practices; (ii) the establishment of standards for the right of buying group members
to participate in their group’s master licensing agreements; and (iii) the establishment of a standard of
comparability for a buying group regarding volume discounts.8 In addition to ACA’s proposed
modifications, we propose to revise our definition of “buying group” to provide that a buying group may
not unreasonably deny membership to any MVPD requesting membership.
5.
Buying groups play an important role in the market for video programming distribution,
both for small and medium-sized MVPDs and for programmers.9 A buying group negotiates master
agreements with video programmers that its MVPD members can opt into and then acts as an interface
between its members and the programmers so that the programmers are able to deal with a single entity.10
Thus, a buying group is generally able to obtain lower license fees for its members than they could obtain
through direct deals with the programmers, and lower transaction costs for programmers by enabling
them to deal with a single entity, rather than many individual MVPDs, for their negotiations and fee
collections.11 Because small and medium-sized MVPDs rely on buying groups as the primary means by
6 See Revision of the Commission’s Program Access Rules et al., Notice of Proposed Rulemaking, 27 FCC Rcd 3413
(2012).
7 See Comments of American Cable Association (June 22, 2012) at 11-12 (“ACA Comments”); Letter from Barbara
S. Esbin, Counsel for ACA, to Marlene H. Dortch, Secretary, FCC, MB Docket Nos. 12-68, 07-18, 05-192 (August
2, 2012), Attachment at 5 (“ACA August 2, 2012 Ex Parte Letter”); see also Letter from Barbara S. Esbin, Counsel
for ACA, to Marlene H. Dortch, Secretary, FCC, MB Docket Nos. 12-68, 07-18, 05-192 (August 31, 2012) (“ACA
August 31, 2012 Ex Parte Letter”).
8 See ACA Comments at 15; ACA August 2, 2012 Ex Parte Letter at 2.
9 See ACA Comments at 12.
10 See id. at 16; ACA August 2, 2012 Ex Parte Letter, Attachment at 3.
11 See ACA Comments at 12, Appendix A, Report of William P. Rogerson, Professor of Economics, Northwestern
University (“Rogerson Report”), at 9; ACA August 2, 2012 Ex Parte Letter, Attachment at 3; see also
Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of 1992:
Development of Competition and Diversity in Video Programming Distribution and Carriage, First Report and
Order, 8 FCC Rcd 3359, 3411, ¶ 114 (1993) (“1993 Program Access Order”) (“We agree with commenters that
buying groups or purchasing agents can offer some economies of scale or other efficiencies to programming vendors
which would justify price discounts under the statute.”).
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which they purchase their programming, small and medium-sized MVPDs are only protected under theprogram access rules to the extent that buying groups are given the same protection in their dealings with
cable-affiliated programmers as individual MVPDs are given.12 The non-discrimination protections of
Section 628(c)(2)(B) of the Communications Act of 1934, as amended (the “Act”) explicitly apply to
buying groups.13 Further, the Commission’s rules extend the non-discrimination protections of the
program access rules to buying groups by including “buying groups” within the definition of
“multichannel video programming distributor” set forth in Section 76.1000(e) of the Commission’s
rules.14
6.
Section 76.1000(c) of the Commission’s rules sets forth the requirements that an entity
must satisfy in order to be considered a “buying group” for purposes of the definition of “multichannel
video programming distributor” in Section 76.1000(e) — that is, to avail itself of the non-discrimination
protections afforded to MVPDs under the program access rules.15 One of these requirements pertains to
the liability of the buying group or its members to the programmer for payments.16 The Commission has
established three alternatives ways for the buying group to satisfy this requirement. First, the entity
seeking to qualify as a “buying group” may agree “to be financially liable for any fees due pursuant to a .
. . programming contract which it signs as a contracting party as a representative of its members” (the
“full liability” option).17 Second, the members of the buying group, as contracting parties, may agree to
joint and several liability (the “joint and several liability” option).18 Third, the entity seeking to qualify as
a “buying group” may maintain liquid cash or credit reserves equal to the cost of one month of
programming fees for all buying group members and each member of the buying group must remain
liable for its pro rata share (the “cash reserve” option).19
7.
ACA asserts that none of these alternative liability options reflect current industry
practice. First, with respect to the “full liability” option, ACA asserts that buying groups, such as the
12 See ACA Comments at 12-13, Rogerson Report at 9; ACA August 2, 2012 Ex Parte Letter, Attachment at 4.
13 See 47 U.S.C. § 548(c)(2)(B) (prohibiting discrimination by a vertically integrated satellite cable programming
vendor “among or between cable systems, cable operators, or other multichannel video programming distributors, or
their agents or buying groups . . . .”) (emphasis added).
14 See 47 C.F.R. § 76.1000(e) (defining “multichannel video programming distributor” as “an entity engaged in the
business of making available for purchase, by subscribers or customers, multiple channels of video programming.
Such entities include, but are not limited to a cable operator, a BRS/EBS provider, a direct broadcast satellite
service, a television receive-only satellite program distributor, and a satellite master antenna television system
operator, as well as buying groups or agents of all such entities.”); 1993 Program Access Order, 8 FCC Rcd at 3362
n.3 (including buying groups under the definition of “multichannel video programming distributor” for purposes of
the program access rules).
15 See 47 C.F.R. § 76.1000(c)(1).
16 In addition to satisfying this requirement, the entity seeking to qualify as a “buying group” must also agree (i) to
uniform billing and standardized contract provisions for individual members; and (ii) either collectively or
individually, on reasonable technical quality standards for individual members of the group. See 47 C.F.R. §
76.1000(c)(2), (3).
17 47 C.F.R. § 76.1000(c)(1); see also 1993 Program Access Order, 8 FCC Rcd at 3412, ¶ 115.
18 See 47 C.F.R. § 76.1000(c)(1); see also 1993 Program Access Order, 8 FCC Rcd at 3412, ¶ 115.
19 See Implementation of the Cable Television Consumer Protection and Competition Act of 1992; Petition for
Rulemaking of Ameritech New Media, Inc. Regarding Development of Competition and Diversity in Video
Programming Distribution and Carriage, Report and Order, 13 FCC Rcd 15822, 15859, ¶ 78 (1998) (“1998
Program Access Order”).
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National Cable Television Cooperative (“NCTC”),20 never assume full liability for the contractualcommitment that each member company makes when it opts into a master agreement.21 Rather, NCTC’s
obligation is limited to forwarding any payments that are received from members to the programmer and
notifying the programmer of any default by one of its members.22 Second, with respect to the “joint and
several liability” option, ACA notes that NCTC found this option impracticable because it would interfere
with some members’ loan covenants as to debt and result in fewer MVPDs being able to participate in
NCTC master agreements.23 Third, with respect to the “cash reserve” option, ACA states that NCTC’s
standard practice in its early years was to require its members to deposit 30 days of payments into an
escrow account when they opted into a master agreement, but programmers and NCTC eventually
decided this protection was unnecessary.24
8.
According to ACA, programmers have widely accepted NCTC’s current business model,
including the reduced level of liability that NCTC assumes under a master agreement.25 Because the
existing definition of “buying group” does not conform to these widely accepted practices, ACA asserts
that NCTC is effectively barred from bringing a program access complaint concerning a master
agreement on behalf of its member companies.26 ACA accordingly recommends that the Commission
modernize the definition of “buying group” in Section 76.1000(c)(1) by adding, as an alternative to the
existing liability options, a requirement that the entity seeking to qualify as a “buying group” assumes
liability to forward all payments due and received from its members for payment under a master
agreement to the appropriate programmer.27
9.
In the FNPRM, we tentatively conclude that we should revise Section 76.1000(c)(1) to
require, as an alternative to the current liability options, that the buying group agree to assume liability to
forward all payments due and received from its members for payment under a master agreement to the
appropriate programmer. In light of the significance of buying groups in the marketplace today and
Congress’s recognition of the importance of buying groups for small MVPDs, we further propose to
revise the definition of “buying group” to provide that a buying group may not unreasonably deny
membership to any MVPD requesting membership.
10.
In addition, we seek comment on ACA’s proposal that we establish a “safe harbor”
subscriber level for buying group members to participate in a master agreement negotiated with a cable-
affiliated programmer. Under ACA’s proposed approach, a buying group member MVPD with no more
20 NCTC is a buying group with approximately 910 member companies representing approximately 25 million
MVPD subscribers. NCTC’s members vary widely in size, from a few dozen subscribers to several million
subscribers. More than half of NCTC’s 910 members have fewer than 1,000 subscribers, while a little over 100 of
its members have more than 10,000 subscribers. In addition to negotiating the rates, terms, and conditions of master
agreements with programmers, NCTC acts as an interface for all billing and collection activities between its member
companies and the programmer. See ACA Comments at 17, Appendix B, Declaration of Frank Hughes, Senior Vice
President of Member Services for NCTC (“NCTC Declaration”), at 2.
21 See ACA Comments at 18, 23, Rogerson Report at 11, NCTC Declaration at 3; ACA August 2, 2012 Ex Parte
Letter, Attachment at 7.
22 See ACA Comments at 18, 23, Rogerson Report at 11.
23 See ACA Comments, NCTC Declaration at 3.
24 See ACA Comments, Rogerson Report at n.15.
25 See ACA Comments at 18, NCTC Declaration at 3.
26 See ACA Comments at 23.
27 See id. at 24; ACA August 2, 2012 Ex Parte Letter, Attachment at 8.
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than three million subscribers would be presumptively entitled to participate in master agreementsbetween the programmer and the buying group.28 A buying group member MVPD which has more than
the safe harbor number of subscribers would also be entitled to participate if it demonstrates that it incurs
some specified minimum share of its total expenditures on programming through the buying group.
Further, when an expiring master agreement is up for renewal, buying group members participating in the
expiring agreement would have the right to participate in the renewed agreement. As a consequence of
this safe harbor, it would be a violation of the Section 628(c)(2)(B) prohibition on discriminatory
practices for a cable-affiliated programmer to refuse to deal with a buying group member that regularly
participates in a master agreement.
11.
Finally, we seek comment on ACA’s proposals that we revise the rules to clarify that: (i)
the standard to be applied in determining whether buying groups are being discriminated against is the
same as that applied to an individual MVPD providing the same number of subscribers to the
programmer; (ii) a cable-affiliated programmer cannot refuse to offer a master agreement to a buying
group that specifies a schedule of non-discriminatory license fees over any range of subscribership levels
that the buying group requests, so long as it is possible that the buying group could provide this number
of subscribers from its current members eligible to participate in the master agreement; and (iii) the
standard of comparability for a buying group is an MVPD providing the same number of customers for
purposes of evaluating all terms and conditions of the agreement, not just the price.
B.
Legal Basis
12.The proposed action is authorized pursuant to Sections 4(i), 4(j), 303(r), and 628 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), and 548.
C.
Description and Estimate of the Number of Small Entities to Which the Proposed
Rules Will Apply
The RFA directs agencies to provide a description of, and, where feasible, an estimate of,
the number of small entities that may be affected by the proposed rules, if adopted herein.29 The RFA
generally defines the term “small entity” as having the same meaning as the terms “small business,”
“small organization,” and “small governmental jurisdiction.”30 In addition, the term “small business” has
the same meaning as the term “small business concern” under the Small Business Act.31 A “small
business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field
of operation; and (3) satisfies any additional criteria established by the Small Business Administration
(SBA).32 Below, we provide a description of such small entities, as well as an estimate of the number of
such small entities, where feasible.
14.
Wired Telecommunications Carriers. The 2007 North American Industry Classification
System (“NAICS”) defines “Wired Telecommunications Carriers” as follows: “This industry comprises
establishments primarily engaged in operating and/or providing access to transmission facilities and
28 See ACA August 31, 2012 Ex Parte Letter, Attachment at 4.
29 5 U.S.C. § 603(b)(3).
30 5 U.S.C. § 601(6).
31 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business
Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.” 5 U.S.C. § 601(3).
32 15 U.S.C. § 632.
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infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video usingwired telecommunications networks. Transmission facilities may be based on a single technology or a
combination of technologies. Establishments in this industry use the wired telecommunications network
facilities that they operate to provide a variety of services, such as wired telephony services, including
VoIP services; wired (cable) audio and video programming distribution; and wired broadband Internet
services. By exception, establishments providing satellite television distribution services using facilities
and infrastructure that they operate are included in this industry.”33 The SBA has developed a small
business size standard for wireline firms within the broad economic census category, “Wired
Telecommunications Carriers.”34 Under this category, the SBA deems a wireline business to be small if it
has 1,500 or fewer employees.35 Census Bureau data for 2007, which now supersede data from the 2002
Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total,
3,144 had employment of 999 or fewer, and 44 firms had employment of 1,000 employees or more. Thus
under this category and the associated small business size standard, the majority of these firms can be
considered small.36
15.
Cable Television Distribution Services. Since 2007, these services have been defined
within the broad economic census category of Wired Telecommunications Carriers; that category is
defined above. The SBA has developed a small business size standard for this category, which is: All
such firms having 1,500 or fewer employees.37 Census Bureau data for 2007, which now supersede data
from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year.
Of this total, 3,144 had employment of 999 or fewer, and 44 firms had employment of 1,000 employees
or more. Thus under this category and the associated small business size standard, the majority of these
firms can be considered small.38
16.
Cable Companies and Systems. The Commission has also developed its own small
business size standards, for the purpose of cable rate regulation. Under the Commission’s rules, a “small
cable company” is one serving 400,000 or fewer subscribers nationwide.39 Industry data indicate that all
but ten cable operators nationwide are small under this size standard.40 In addition, under the
Commission’s rules, a “small system” is a cable system serving 15,000 or fewer subscribers.41 Industry
data indicate that, of 6,101 systems nationwide, 4,410 systems have under 10,000 subscribers, and an
33 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
34 13 C.F.R. § 121.201, 2007 NAICS code 517110.
35 See id.
36 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
37 13 C.F.R. § 121.201, 2007 NAICS code 517110.
38 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
39 47 C.F.R. § 76.901(e). The Commission determined that this size standard equates approximately to a size
standard of $100 million or less in annual revenues. Implementation of Sections of the 1992 Cable Act: Rate
Regulation, Sixth Report and Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).
40 See BROADCASTING & CABLE YEARBOOK 2010 at C-2 (2009) (data current as of Dec. 2008).
41 47 C.F.R. § 76.901(c).
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additional 258 systems have 10,000-19,999 subscribers.42 Thus, under this standard, most cable systemsare small.
17.
Cable System Operators. The Communications Act of 1934, as amended, also contains a
size standard for small cable system operators, which is “a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not
affiliated with any entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.”43 The Commission has determined that an operator serving fewer than 677,000
subscribers shall be deemed a small operator if its annual revenues, when combined with the total annual
revenues of all its affiliates, do not exceed $250 million in the aggregate.44 Industry data indicate that all
but nine cable operators nationwide are small under this subscriber size standard.45 We note that the
Commission neither requests nor collects information on whether cable system operators are affiliated
with entities whose gross annual revenues exceed $250 million,46 and therefore we are unable to estimate
more accurately the number of cable system operators that would qualify as small under this size
standard.
18.
Direct Broadcast Satellite (“DBS”) Service. DBS service is a nationally distributed
subscription service that delivers video and audio programming via satellite to a small parabolic “dish”
antenna at the subscriber’s location. DBS, by exception, is now included in the SBA’s broad economic
census category, “Wired Telecommunications Carriers,”47 which was developed for small wireline firms.
Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees.48
Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were
3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999
or fewer, and 44 firms had employment of 1,000 employees or more. Thus under this category and the
associated small business size standard, the majority of these firms can be considered small.49 Currently,
only two entities provide DBS service, which requires a great investment of capital for operation:
DIRECTV and DISH Network).50 Each currently offers subscription services. DIRECTV51 and DISH
42See TELEVISION & CABLE FACTBOOK 2009 at F-2 (2009) (data current as of Oct. 2008). The data do not
include 957 systems for which classifying data were not available.
43 47 U.S.C. § 543(m)(2); see 47 C.F.R. § 76.901(f) & nn. 1-3.
44 47 C.F.R. § 76.901(f); see FCC Announces New Subscriber Count for the Definition of Small Cable Operator,
Public Notice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).
45 See BROADCASTING & CABLE YEARBOOK 2010 at C-2 (2009) (data current as of Dec. 2008).
46 The Commission does receive such information on a case-by-case basis if a cable operator appeals a local
franchise authority’s finding that the operator does not qualify as a small cable operator pursuant to § 76.901(f) of
the Commission’s rules. See 47 C.F.R. § 76.901(f).
47 See 13 C.F.R. § 121.201, 2007 NAICS code 517110. The 2007 NAICS definition of the category of “Wired
Telecommunications Carriers” is in paragraph 14, above.
48 13 C.F.R. § 121.201, 2007 NAICS code 517110.
49 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
50 See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming,
Fourteenth Annual Report, FCC 12-81, ¶ 31 (2012) (“14th Annual Report”).
51 As of December 2010, DIRECTV is the largest DBS operator and the second largest MVPD, serving an estimated
19% of MVPD subscribers nationwide. See id. at Table 5; see also supra App. E at n. 9.
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Network52 each report annual revenues that are in excess of the threshold for a small business. BecauseDBS service requires significant capital, we believe it is unlikely that a small entity as defined by the
SBA would have the financial wherewithal to become a DBS service provider.
19.
Satellite Master Antenna Television (SMATV) Systems, also known as Private Cable
Operators (PCOs). SMATV systems or PCOs are video distribution facilities that use closed
transmission paths without using any public right-of-way. They acquire video programming and
distribute it via terrestrial wiring in urban and suburban multiple dwelling units such as apartments and
condominiums, and commercial multiple tenant units such as hotels and office buildings. SMATV
systems or PCOs are now included in the SBA’s broad economic census category, “Wired
Telecommunications Carriers,”53 which was developed for small wireline firms. Under this category, the
SBA deems a wireline business to be small if it has 1,500 or fewer employees.54 Census Bureau data for
2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category
that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. Thus, under this category and the associated small business
size standard, the majority of these firms can be considered small.55
20.
Home Satellite Dish (“HSD”) Service. HSD or the large dish segment of the satellite
industry is the original satellite-to-home service offered to consumers, and involves the home reception of
signals transmitted by satellites operating generally in the C-band frequency. Unlike DBS, which uses
small dishes, HSD antennas are between four and eight feet in diameter and can receive a wide range of
unscrambled (free) programming and scrambled programming purchased from program packagers that
are licensed to facilitate subscribers’ receipt of video programming. Because HSD provides subscription
services, HSD falls within the SBA-recognized definition of Wired Telecommunications Carriers.56 The
SBA has developed a small business size standard for this category, which is: all such firms having 1,500
or fewer employees.57 Census Bureau data for 2007, which now supersede data from the 2002 Census,
show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had
employment of 999 or fewer, and 44 firms had employment of 1,000 employees or more. Thus, under
this category and the associated small business size standard, the majority of these firms can be
considered small.58
21.
Broadband Radio Service and Educational Broadband Service. Broadband Radio
Service systems, previously referred to as Multipoint Distribution Service (MDS) and Multichannel
Multipoint Distribution Service (MMDS) systems, and “wireless cable,” transmit video programming to
subscribers and provide two-way high speed data operations using the microwave frequencies of the
Broadband Radio Service (BRS) and Educational Broadband Service (EBS) (previously referred to as the
52 As of December 2010, DISH Network is the second largest DBS operator and the third largest MVPD, serving an
estimated 14% of MVPD subscribers nationwide. See 14th Annual Report at Table 5; see also supra App. E at n. 9.
53 13 C.F.R. § 121.201, 2007 NAICS code 517110.
54 See id.
55 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
56 13 C.F.R. § 121.201, 2007 NAICS code 517110.
57 See id.
58 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
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Instructional Television Fixed Service (ITFS)).59 In connection with the 1996 BRS auction, theCommission established a small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three calendar years.60 The BRS auctions resulted
in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67
auction winners, 61 met the definition of a small business. BRS also includes licensees of stations
authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction
winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA
authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities.61
After adding the number of small business auction licensees to the number of incumbent licensees not
already counted, we find that there are currently approximately 440 BRS licensees that are defined as
small businesses under either the SBA or the Commission’s rules. In 2009, the Commission conducted
Auction 86, the sale of 78 licenses in the BRS areas.62 The Commission offered three levels of bidding
credits: (i) a bidder with attributed average annual gross revenues that exceed $15 million and do not
exceed $40 million for the preceding three years (small business) received a 15 percent discount on its
winning bid; (ii) a bidder with attributed average annual gross revenues that exceed $3 million and do not
exceed $15 million for the preceding three years (very small business) received a 25 percent discount on
its winning bid; and (iii) a bidder with attributed average annual gross revenues that do not exceed $3
million for the preceding three years (entrepreneur) received a 35 percent discount on its winning bid.63
Auction 86 concluded in 2009 with the sale of 61 licenses.64 Of the ten winning bidders, two bidders that
claimed small business status won 4 licenses; one bidder that claimed very small business status won
three licenses; and two bidders that claimed entrepreneur status won six licenses.
22.
In addition, the SBA’s Cable Television Distribution Services small business size
standard is applicable to EBS. There are presently 2,032 EBS licensees. All but 100 of these licenses are
held by educational institutions. Educational institutions are included in this analysis as small entities.65
Thus, we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Television
Distribution Services have been defined within the broad economic census category of Wired
Telecommunications Carriers; that category is defined as follows: “This industry comprises
establishments primarily engaged in operating and/or providing access to transmission facilities and
59 Amendment of Parts 21 and 74 of the Commission’s Rules with Regard to Filing Procedures in the Multipoint
Distribution Service and in the Instructional Television Fixed Service and Implementation of Section 309(j) of the
Communications Act—Competitive Bidding, MM Docket No. 94-131, PP Docket No. 93-253, Report and Order, 10
FCC Rcd 9589, 9593, ¶ 7 (1995).
60 47 C.F.R. § 21.961(b)(1).
61 47 U.S.C. § 309(j). Hundreds of stations were licensed to incumbent MDS licensees prior to implementation of
Section 309(j) of the Communications Act of 1934, 47 U.S.C. § 309(j). For these pre-auction licenses, the
applicable standard is SBA’s small business size standard of 1500 or fewer employees.
62 Auction of Broadband Radio Service (BRS) Licenses, Scheduled for October 27, 2009, Notice and Filing
Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 86, Public Notice, 24
FCC Rcd 8277 (2009).
63 Id. at 8296.
64 Auction of Broadband Radio Service Licenses Closes, Winning Bidders Announced for Auction 86, Down
Payments Due November 23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to Deny Period,
Public Notice, 24 FCC Rcd 13572 (2009).
65 The term “small entity” within SBREFA applies to small organizations (nonprofits) and to small governmental
jurisdictions (cities, counties, towns, townships, villages, school districts, and special districts with populations of
less than 50,000). 5 U.S.C. §§ 601(4)–(6). We do not collect annual revenue data on EBS licensees.
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infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video usingwired telecommunications networks. Transmission facilities may be based on a single technology or a
combination of technologies.”66 The SBA has developed a small business size standard for this category,
which is: all such firms having 1,500 or fewer employees.67 Census Bureau data for 2007, which now
supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for
the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had employment of
1,000 employees or more. Thus, under this category and the associated small business size standard, the
majority of these firms can be considered small.68
23.
Fixed Microwave Services. Microwave services include common carrier,69 private-
operational fixed,70 and broadcast auxiliary radio services.71 They also include the Local Multipoint
Distribution Service (LMDS),72 the Digital Electronic Message Service (DEMS),73 and the 24 GHz
Service,74 where licensees can choose between common carrier and non-common carrier status.75 At
present, there are approximately 31,428 common carrier fixed licensees and 79,732 private operational-
fixed licensees and broadcast auxiliary radio licensees in the microwave services. There are
approximately 120 LMDS licensees, three DEMS licensees, and three 24 GHz licensees. The
Commission has not yet defined a small business with respect to microwave services. For purposes of the
IRFA, we will use the SBA’s definition applicable to Wireless Telecommunications Carriers (except
satellite)—i.e., an entity with no more than 1,500 persons.76 Under the present and prior categories, the
SBA has deemed a wireless business to be small if it has 1,500 or fewer employees.77 For the category of
Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede data
contained in the 2002 Census, show that there were 1,383 firms that operated that year.78 Of those 1,383,
66 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers,” (partial
definition), www.census.gov/naics/2007/def/ND517110.HTM#N517110.
67 13 C.F.R. § 121.201, 2007 NAICS code 517110.
68 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
69 See 47 C.F.R. Part 101, Subparts C and I.
70 See 47 C.F.R. Part 101, Subparts C and H.
71 Auxiliary Microwave Service is governed by Part 74 of Title 47 of the Commission’s Rules. See 47 C.F.R. Part
74. Available to licensees of broadcast stations and to broadcast and cable network entities, broadcast auxiliary
microwave stations are used for relaying broadcast television signals from the studio to the transmitter, or between
two points such as a main studio and an auxiliary studio. The service also includes mobile TV pickups, which relay
signals from a remote location back to the studio.
72 See 47 C.F.R. Part 101, Subpart L.
73 See 47 C.F.R. Part 101, Subpart G.
74 See id.
75 See 47 C.F.R. §§ 101.533, 101.1017.
76 13 C.F.R. § 121.201, 2007 NAICS code 517210.
77 See id. The now-superseded, pre-2007 C.F.R. citations were 13 C.F.R. § 121.201, NAICS codes 517211 and
517212 (referring to the 2002 NAICS).
78 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009);
http://www.census.gov/econ/industry/ec07/a517210.htm (Subject Series: Establishment and Firm Size (national) –
Table 5: Employment Size of Firms for the U.S).
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1,368 had fewer than 1000 employees, and 15 firms had 1000 employees or more. Thus under thiscategory and the associated small business size standard, the majority of firms can be considered small.
We note that the number of firms does not necessarily track the number of licensees. We estimate that
virtually all of the Fixed Microwave licensees (excluding broadcast auxiliary licensees) would qualify as
small entities under the SBA definition.
24.
Open Video Systems. The open video system (“OVS”) framework was established in
1996, and is one of four statutorily recognized options for the provision of video programming services
by local exchange carriers.79 The OVS framework provides opportunities for the distribution of video
programming other than through cable systems. Because OVS operators provide subscription services,80
OVS falls within the SBA small business size standard covering cable services, which is “Wired
Telecommunications Carriers.”81 The SBA has developed a small business size standard for this
category, which is: all such firms having 1,500 or fewer employees.82 Census Bureau data for 2007,
which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that
operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. Thus, under this category and the associated small business
size standard, the majority of these firms can be considered small.83 In addition, we note that the
Commission has certified approximately 42 OVS operators, with some now providing service.84
Broadband service providers (“BSPs”) are currently the only significant holders of OVS certifications or
local OVS franchises.85 Affiliates of Residential Communications Network, Inc. (“RCN”) received
approval to operate OVS systems in New York City, Boston, Washington, D.C., and other areas. RCN
has sufficient revenues to assure that they do not qualify as a small business entity. The Commission
does not have financial or employment information regarding the other entities authorized to provide
OVS, some of which may not yet be operational. Thus, up to 41 of the OVS operators may qualify as
small entities.
25.
Cable and Other Subscription Programming. The Census Bureau defines this category
as follows: “This industry comprises establishments primarily engaged in operating studios and facilities
for the broadcasting of programs on a subscription or fee basis . . . . These establishments produce
programming in their own facilities or acquire programming from external sources. The programming
material is usually delivered to a third party, such as cable systems or direct-to-home satellite systems, for
transmission to viewers.”86 The SBA has developed a small business size standard for this category,
79 47 U.S.C. § 571(a)(3)-(4). See Implementation of Section 19 of the 1992 Cable Act and Annual Assessment of the
Status of Competition in the Market for the Delivery of Video Programming, Thirteenth Report, 24 FCC Rcd 542,
606, ¶ 135 (2009) (”13th Annual Report”).
80 See 47 U.S.C. § 573.
81 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
82 13 C.F.R. § 121.201, 2007 NAICS code 517110.
83 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
84 A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html.
85 See 13th Annual Report, 24 FCC Rcd at 606-07, ¶ 135. BSPs are newer firms that are building state-of-the-art,
facilities-based networks to provide video, voice, and data services over a single network.
86 U.S. Census Bureau, 2007 NAICS Definitions, “515210 Cable and Other Subscription Programming”;
http://www.census.gov/naics/2007/def/ND515210.HTM#N515210.
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which is: all such firms having $15 million dollars or less in annual revenues.87 To gauge small businessprevalence in the Cable and Other Subscription Programming industries, the Commission relies on data
currently available from the U.S. Census for the year 2007. Census Bureau data for 2007, which now
supersede data from the 2002 Census, show that there were 396 firms in this category that operated for
the entire year.88 Of that number, 325 operated with annual revenues of $9,999,999 dollars or less.89
Seventy-one (71) operated with annual revenues of between $10 million and $100 million or more.90
Thus, under this category and associated small business size standard, the majority of firms can be
considered small.
26.
Small Incumbent Local Exchange Carriers. We have included small incumbent local
exchange carriers in this present RFA analysis. A “small business” under the RFA is one that, inter alia,
meets the pertinent small business size standard (e.g., a telephone communications business having 1,500
or fewer employees), and “is not dominant in its field of operation.”91 The SBA’s Office of Advocacy
contends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field
of operation because any such dominance is not “national” in scope.92 We have therefore included small
incumbent local exchange carriers in this RFA analysis, although we emphasize that this RFA action has
no effect on Commission analyses and determinations in other, non-RFA contexts.
27.
Incumbent Local Exchange Carriers (“LECs”). Neither the Commission nor the SBA
has developed a small business size standard specifically for incumbent local exchange services. The
appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under
that size standard, such a business is small if it has 1,500 or fewer employees.93 Census Bureau data for
2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category
that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. According to Commission data, 1,307 carriers reported that
they were incumbent local exchange service providers.94 Of these 1,307 carriers, an estimated 1,006 have
1,500 or fewer employees and 301 have more than 1,500 employees.95 Thus, under this category and the
associated small business size standard, the majority of these firms can be considered small.96
87 13 C.F.R. § 121.201, 2007 NAICS code 515210.
88 See http://www.census.gov/econ/industry/ec07/a515210.htm (Subject Series: Establishment and Firm Size
(national) – Table 4: Revenue Size of Firms for the U.S).
89 Id.
90 Id.
91 15 U.S.C. § 632.
92 Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27,
1999). The Small Business Act contains a definition of “small-business concern,” which the RFA incorporates into
its own definition of “small business.” See 15 U.S.C. § 632(a) (Small Business Act); 5 U.S.C. § 601(3) (RFA).
SBA regulations interpret “small business concern” to include the concept of dominance on a national basis. See 13
C.F.R. § 121.102(b).
93 13 C.F.R. § 121.201, 2007 NAICS code 517110.
94 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (“Trends in Telephone Service”).
95 See id.
96 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
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28.Competitive Local Exchange Carriers, Competitive Access Providers (CAPs), “Shared-
Tenant Service Providers,” and “Other Local Service Providers.” Neither the Commission nor the SBA
has developed a small business size standard specifically for these service providers. The appropriate size
standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.97 Census Bureau data for 2007,
which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that
operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
employment of 1,000 employees or more. Thus, under this category and the associated small business
size standard, the majority of these firms can be considered small.98 Consequently, the Commission
estimates that most providers of competitive local exchange service, competitive access providers,
“Shared-Tenant Service Providers,” and “Other Local Service Providers” are small entities.
29.
Motion Picture and Video Production. The Census Bureau defines this category as
follows: “This industry comprises establishments primarily engaged in producing, or producing and
distributing motion pictures, videos, television programs, or television commercials.”99 We note that
firms in this category may be engaged in various industries, including cable programming. Specific
figures are not available regarding how many of these firms produce and/or distribute programming for
cable television. The SBA has developed a small business size standard for this category, which is: all
such firms having $29.5 million dollars or less in annual revenues.100 To gauge small business prevalence
in the Motion Picture and Video Production industries, the Commission relies on data currently available
from the U.S. Census for the year 2007. Census Bureau data for 2007, which now supersede data from
the 2002 Census, show that there were 9,095 firms in this category that operated for the entire year.101 Of
these, 8995 had annual receipts of $24,999,999 or less, and 100 had annual receipts ranging from not less
that $25,000,000 to $100,000,000 or more.102 Thus, under this category and associated small business
size standard, the majority of firms can be considered small.
30.
Motion Picture and Video Distribution. The Census Bureau defines this category as
follows: “This industry comprises establishments primarily engaged in acquiring distribution rights and
distributing film and video productions to motion picture theaters, television networks and stations, and
exhibitors.”103 We note that firms in this category may be engaged in various industries, including cable
programming. Specific figures are not available regarding how many of these firms produce and/or
distribute programming for cable television. The SBA has developed a small business size standard for
this category, which is: all such firms having $29.5 million dollars or less in annual revenues.104 To
gauge small business prevalence in the Motion Picture and Video Distribution industries, the Commission
97 13 C.F.R. § 121.201, 2007 NAICS code 517110.
98 See http://www.census.gov/econ/industry/ec07/a517110.htm (Subject Series: Establishment and Firm Size
(national) – Table 5: Employment Size of Firms for the U.S).
99 U.S. Census Bureau, 2007 NAICS Definitions, “51211 Motion Picture and Video Production”;
http://www.census.gov/naics/2007/def/NDEF512.HTM#N51211.
100 13 C.F.R. § 121.201, 2007 NAICS code 512110.
101 See http://www.census.gov/econ/industry/ec07/a51211.htm (Subject Series: Establishment and Firm Size
(national) – Table 4: Revenue Size of Firms for the U.S).
102 Id.
103 See U.S. Census Bureau, 2007 NAICS Definitions, “51212 Motion Picture and Video Distribution”;
http://www.census.gov/naics/2007/def/NDEF512.HTM#N51212.
104 13 C.F.R. § 121.201, 2007 NAICS code 512120.
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relies on data currently available from the U.S. Census for the year 2007. Census Bureau data for 2007,which now supersede data from the 2002 Census, show that there were 450 firms in this category that
operated for the entire year.105 Of these, 434 had annual receipts of $24,999,999 or less, and 16 had
annual receipts ranging from not less that $25,000,000 to $100,000,000 or more.106 Thus, under this
category and associated small business size standard, the majority of firms can be considered small.
D.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
Certain proposed rule changes discussed in the FNPRM would affect reporting,
recordkeeping, or other compliance requirements. The FNPRM seeks comment on whether to establish
(i) a rebuttable presumption that an exclusive contract for a cable-affiliated RSN (regardless of whether it
is terrestrially delivered or satellite-delivered) is an “unfair act” under Section 628(b); (ii) a rebuttable
presumption that a complainant challenging an exclusive contract involving a cable-affiliated RSN
(regardless of whether it is terrestrially delivered or satellite-delivered) is entitled to a standstill of an
existing programming contract during the pendency of a complaint; (iii) rebuttable presumptions with
respect to the “unfair act” element and/or the “significant hindrance” element of a Section 628(b) claim
challenging an exclusive contract involving a cable-affiliated “national sports network” (regardless of
whether it is terrestrially delivered or satellite-delivered); and (iv) a rebuttable presumption that, once a
complainant succeeds in demonstrating that an exclusive contract involving a cable-affiliated network
(regardless of whether it is terrestrially delivered or satellite-delivered) violates Section 628(b) (or,
potentially, Section 628(c)(2)(B)), any other exclusive contract involving the same network violates
Section 628(b) (or Section 628(c)(2)(B)). The FNPRM tentatively concludes that the Commission should
revise definition of “buying group” to require, as an alternative to the current liability options, that the
buying group agree to assume liability to forward all payments due and received from its members for
payment under a master agreement to the appropriate programmer. The FNPRM also proposes to revise
the definition of “buying group” to provide that a buying group may not unreasonably deny membership
to any MVPD requesting membership. In addition, the FNPRM seeks comment on whether the
Commission should establish a “safe harbor” subscriber level for buying group members to participate in
master agreements with cable-affiliated programmers. As a consequence of this safe harbor, it would be a
violation of the Section 628(c)(2)(B) prohibition on discriminatory practices for a cable-affiliated
programmer to refuse to deal with a buying group member that regularly participates in a master
agreement. Finally, the FNPRM seeks comment on whether the Commission should revise the rules to
clarify that: (i) the standard to be applied in determining whether buying groups are being discriminated
against is the same as that applied to an individual MVPD providing the same number of subscribers to
the programmer; (ii) a cable-affiliated programmer cannot refuse to offer a master agreement to a buying
group that specifies a schedule of non-discriminatory license fees over any range of subscribership levels
that the buying group requests, so long as it is possible that the buying group could provide this number
of subscribers from its current members eligible to participate in the master agreement; and (iii) the
standard of comparability for a buying group is an MVPD providing the same number of customers for
purposes of evaluating all terms and conditions of the agreement, not just the price.
E.
Steps Taken to Minimize Significant Impact on Small Entities and
Significant Alternatives Considered
The RFA requires an agency to describe any significant alternatives that it has considered
in developing its proposed approach, which may include the following four alternatives (among others):
105 See http://www.census.gov/econ/industry/ec07/a51212.htm (Subject Series: Establishment and Firm Size
(national) – Table 4: Revenue Size of Firms for the U.S).
106 Id.
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“(1) the establishment of differing compliance or reporting requirements or timetables that take intoaccount the resources available to small entities; (2) the clarification, consolidation, or simplification of
compliance and reporting requirements under the rule for such small entities; (3) the use of performance
rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such
small entities.”107
33.
The FNPRM seeks comment on whether to establish (i) a rebuttable presumption that an
exclusive contract for a cable-affiliated RSN (regardless of whether it is terrestrially delivered or satellite-
delivered) is an “unfair act” under Section 628(b); (ii) a rebuttable presumption that a complainant
challenging an exclusive contract involving a cable-affiliated RSN (regardless of whether it is terrestrially
delivered or satellite-delivered) is entitled to a standstill of an existing programming contract during the
pendency of a complaint; (iii) rebuttable presumptions with respect to the “unfair act” element and/or the
“significant hindrance” element of a Section 628(b) claim challenging an exclusive contract involving a
cable-affiliated “national sports network” (regardless of whether it is terrestrially delivered or satellite-
delivered); and (iv) a rebuttable presumption that, once a complainant succeeds in demonstrating that an
exclusive contract involving a cable-affiliated network (regardless of whether it is terrestrially delivered
or satellite-delivered) violates Section 628(b) (or, potentially, Section 628(c)(2)(B)), any other exclusive
contract involving the same network violates Section 628(b) (or Section 628(c)(2)(B)). These
presumptions may benefit small entities by reducing costs by eliminating the need for litigants and the
Commission to undertake repetitive examinations of Commission precedent and empirical evidence on
RSNs.
34.
The FNPRM also seeks comment on proposed modifications to the program access rules
that are intended to ensure that buying groups utilized by small and medium-sized MVPDs can avail
themselves of the non-discrimination protections of the program access rules. Thus, the proposed
modifications would benefit small entities. Specifically, the proposed revision of the definition of
“buying group” to include an alternative liability option may benefit small entities by enabling buying
groups that do not fall within the scope of the existing definition to file complaints with the Commission
alleging violations of the non-discrimination provisions of the program access rules on behalf of their
small and medium-sized MVPD members. Additionally, the proposed revision of the “buying group”
definition to provide that a buying group may not unreasonably deny membership to any MVPD
requesting membership may benefit small entities by making the benefits of buying group membership
available to more small entities. Small entities may also benefit from the establishment of a “safe harbor”
subscriber level for buying group members to participate in master agreements with cable-affiliated
programmers and from clarifications to the rules addressing the standard of comparability for a buying
group regarding volume discounts.
F.
Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed
Rule
None
107 5 U.S.C. § 603(c)(1) – (c)(4).
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STATEMENT OF
CHAIRMAN JULIUS GENACHOWSKI
Re:Revision of the Commission’s Program Access Rules, MB Docket No. 12-68 et al.
The FCC is focused on promoting competition and protecting consumers in the evolving video
market. Today’s unanimous decision enables the FCC to continue preventing anticompetitive video
distribution arrangements through a legally sustainable, expeditious, case-by-case review.
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STATEMENT OF
COMMISSIONER ROBERT M. McDOWELL
APPROVING IN PART, CONCURRING IN PART
Re:Revision of the Commission’s Program Access Rules, MB Docket No. 12-68 et al.
In this order, we eliminate the rule prohibiting exclusive contracts between cable operators and
cable-affiliated programming vendors for satellite-delivered programming. In mandating that the
Commission adopt the exclusivity ban as part of the Cable Act of 1992, Congress provided that this
prohibition would expire in October 2002, unless the FCC found that it remained necessary to preserve
competition and diversity in multichannel video programming distribution.1 By extending this
prohibition twice in 2002 and 2007, the Commission has already retained this rule for a decade longer
than Congress required.
In short, the marketplace has evolved substantially since Congress last spoke on this subject a
generation ago. The exclusivity ban served its purpose, but now the facts justifying its existence have
changed in favor of consumers. Accordingly, this creaky relic must be shown the door.
Although I supported the 2007 extension of the exclusivity ban to further encourage competition
in the video distribution market, I recognized, at the time, that “[m]ore competition in a particular market
obviates the need for regulation.”2 The United States Court of Appeals for the D.C. Circuit, when
reviewing the 2007 extension, came to a similar conclusion, in finding that, if the market continued to
evolve, the FCC would be able to conclude that the exclusivity ban is no longer necessary. In fact, the
court went so far as to say that “[w]e anticipate that cable’s dominance will have diminished still more by
the time the Commission next reviews the prohibition, and expect that at that time the Commission will
weigh heavily Congress’s intention that the exclusive contract prohibition will eventually sunset.”3
Indeed, since the last review of this rule in 2007, the multichannel video programming
distribution market has continued to evolve and become more competitive. Despite this increased
competition, I recognize that vertical integration between cable operators and programmers could raise
concerns in certain instances, especially for non-replicable programming, such as regional sports
networks. To the extent that any such issues arise, the Commission can perform a case-by-case review of
exclusive contracts under the remaining program access rules using established complaint processes to
ensure that anticompetitive effects do not occur, consumers are not harmed and the marketplace continues
to flourish. In today’s vibrant marketplace, a prophylactic exclusivity ban is not supportable when we
have a more competitive market, as well as a Congressionally-required alternative means to protect
competition and diversity in the distribution of video programming.
For these reasons, I support the sunset of the prohibition on exclusive contracts. I anticipate that
its elimination will spur the creation of even more new programming and provide American consumers
more choices through product differentiation. I do, however, have significant concerns that many of the
1 47 U.S.C. § 548(c)(2)(D), (c)(5).
2 Implementation of the Cable Television Consumer Protection and Competition Act of 1992, MB Docket Nos. 07-
29, 07-198, Report and Order and Notice of Proposed Rulemaking, 22 FCC Rcd 17791, 17934 (2007) (stating that,
although the video distribution market had changed significantly, there was increased consolidation in the cable
industry and regional clustering of cable systems).
3 Cablevision Systems Corp. v. FCC, 597 F.3d 1306, 1314 (D.C. Cir. 2010).
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positive steps we take today could be undermined by our inquiry into whether the FCC should establish aseries of rebuttable presumptions that would apply to certain exclusive contracts challenged under our
remaining program access rules.
Despite the Commission’s finding that exclusive contracts can be procompetitive and should be
reviewed on a case-by-case basis, the FCC seeks comment on whether there should be rebuttable
presumptions that certain exclusive contracts should be considered, by their very nature, to be “unfair”
regardless of the specific market conditions. The Commission also inquires as to whether there should be
a rebuttable presumption for obtaining a standstill arrangement while certain contracts are challenged.
Such a presumption does not appear to be consistent with Commission precedent finding that a standstill
is an extraordinary remedy that may be awarded only upon a factual showing that the plaintiff is entitled
to such relief. If we proceed, these contradictions will undoubtedly result in legal challenges under the
Administrative Procedure Act.4 Also, is this the beginning of a back-handed attempt to resurrect the
exclusivity ban for certain exclusive contracts using the remaining program access rules and rebuttable
presumptions?
I am also concerned about attempts to extend the rebuttable presumption established for regional
sports networks to exclusive contracts for cable-affiliated national sports networks. Such questions could
result in content-based regulations – obviously raising First Amendment concerns – with no actual
evidence of market failure. In fact, the arguments presented in support of such a presumption are based,
in part, on the hypothetical harms that could arise if a high-profile national sports network is acquired by
cable operators. Once again, the Commission may be trying to tinker with a market that may function
quite well if left alone. In the absence of a bona fide market analysis and resulting evidence of market
failure, we should avoid ex ante regulation and its unpredictable and unintended costs.
For these reasons, I concur to the sections of the further notice seeking comment on these
rebuttable presumptions. I look forward to reviewing the comments and appreciate that there are
questions contained in the further notice that provide participants the ability to opine on the various legal
issues raised by these presumptions. Further, I am hopeful that all stakeholders will continue to engage
with the Commission to suggest improvements to our complaint processes if issues arise. We should
always strive to do better. I thank the Media Bureau for their hard work on this order and further notice
of proposed rulemaking.
4 See, e.g., Cablevision Systems Corp. v. FCC, 649 F.3d 695, 716 (D.C. Cir. 2011) (stating that “under the APA,
agencies may adopt evidentiary presumptions provided that the presumptions (1) shift the burden of production and
not the burden of persuasion, … and (2) are rational…. An evidentiary presumption is only permissible if there is a
sound and rational connection between the proved and inferred facts, and when proof of one fact renders the
existence of another fact so probable that it is sensible and timesaving to assume the truth of [the inferred] fact ...
until the adversary disproves it.”).
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STATEMENT OF
COMMISSIONER MIGNON L. CLYBURN
Re:Revision of the Commission’s Program Access Rules, MB Docket No. 12-68 et al.
Today we vote to sunset the Commission's Program Access Rules enacted by Congress 20 years
ago, but not without providing increased protections that will further strengthen our ability to resolve
disputes within a set time frame.
There is much debate over the level of competitiveness in the current video market, and I suspect
that this will continue. But our job – to ensure that no matter the opinions and actions of industry on
either side of a dispute, that consumers are not caught in the middle – to me is quite clear. While the
Order released today reaches a conclusion with which I ultimately agree, I felt it necessary to include
language that strengthens what already exists on our books.
While the exclusive contract prohibition will indeed sunset, and the opportunity for
discriminatory and exclusive dealing will still exist, the language of this rulemaking will seek to end the
ability of a defendant in a program access dispute to prolong the FCC’s adjudication timeline with time-
consuming dilatory maneuvers.
As the language states, we put forth a six-month deadline for the FCC’s resolution of program
access complaints on a case by case basis. This will help to resolve disputes quickly and efficiently,
provide certainty to all parties to the complaint, and fulfill our statutory mandate to provide for expedited
review of program access complaints. Both sides of a dispute will be afforded the pleading timeline that
is currently in place, but in the interest of fairness, the Media Bureau must render a decision within 2-3
months after the record closes. It is my hope that such a timeline will get rid of the uncertainty, expense,
and frustration that comes with prolonged litigation before this agency, and resolution within six months
will allow unsuccessful complainants to evaluate their options and proceed accordingly.
Further, the questions we ask regarding a rebuttable presumption that a complainant challenging
an exclusive contract involving a cable-affiliated regional sports network be entitled to a standstill of an
existing programming contract during the pendency of a complaint will give us valuable input into the
record on the need, or lack thereof, of such an amendment going forward.
I am also pleased that we are also seeking comment on the possibility of further presumptions,
specifically on the unfair act and significant hindrance elements of a challenge to an exclusive
arrangement involving a cable-affiliated national sports network.
I want to thank the Media Bureau, especially the tireless work of David Konczal, for their
diligence on this item and the meaningful additions that were added.
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STATEMENT OF
COMMISSIONER JESSICA ROSENWORCEL
Re:Revision of the Commission’s Program Access Rules, MB Docket No. 12-68 et al.
In the Cable Television Consumer Protection and Competition Act of 1992, Congress directed the
Commission to adopt rules prohibiting exclusive arrangements by vertically integrated cable companies
with respect to satellite delivered programming. This prohibition was slated to expire in 2002 unless the
Commission determined that an extension was “necessary to preserve and protect competition and
diversity in the distribution of video programming.” The Commission previously extended this ban
twice, in 2002 and 2007. Today, however, the agency concludes that a further extension is not warranted
in light of changes in the video programming market.
Without question, the video marketplace has evolved in the past two decades. But technological
change does not preclude the need to be concerned about anticompetitive behavior and the impact of
vertical integration on consumers. Exclusive arrangements for “must have” programming can still lead to
less competition, denying consumers the benefits of lower prices and higher quality services. This is
especially true when such programming is withheld from unaffiliated distributors that are small, rural, or
new entrants in the marketplace. Accordingly, Section 628 of the Communications Act provides a
number of mechanisms apart from the blanket prohibition to challenge anticompetitive behavior on a
case-by-case basis. To this end, the Order provides a shot clock to ensure timely resolution of complaints.
It also provides a presumption that an exclusive arrangement with respect to regional sports networks will
significantly hinder a complaining distributor from providing satellite cable programming or satellite
broadcast programming. Furthermore, the Order seeks comment on whether the Commission should
establish a number of additional presumptions, including whether an exclusive contract for a cable-
affiliated regional sports network should be presumed to be an “unfair act” under Section 628(b) and
whether a complainant should be presumed to be entitled to a standstill for an existing agreement under
certain circumstances.
Consequently, I support today’s decision. However, the Commission must keep a watchful eye
on the evolving marketplace and be ready to take action if the processes we adopt today do not provide
consumers with the safeguards they need and deserve.
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STATEMENT OF
COMMISSIONER AJIT PAI
Re:Revision of the Commission’s Program Access Rules, MB Docket No. 12-68 et al.
Change is the only constant in the communications sector. This heightens the need for the FCC
to make sure that our regulations reflect the current realities of the marketplace. One way to do this is
through the use of sunset clauses, which require us to review existing rules and decide whether they
should be modified or eliminated in light of competition in a particular market. Today’s order highlights
the value of sunset clauses, whether imposed by statute or adopted by discretion.1
Congress passed the Cable Television Consumer Protection and Competition Act of 1992 (Cable
Act)2 against the backdrop of a video marketplace dominated by cable operators with local monopolies.
Among other things, the Act codified a ban on exclusive contracts for satellite-delivered cable and
broadcast programming between cable operators and cable-affiliated networks.
Congress understood, however, that if its efforts to encourage competition were successful, the
ban on exclusive contracts eventually would become unnecessary. Therefore, it included a sunset clause:
the ban would only last for ten years, after which the Commission would decide whether it remained
“necessary to preserve and protect competition and diversity in the distribution of video programming.”3
When the exclusivity ban expired in 2002, the Commission voted to renew it for another five years.4 The
Commission extended it again in 2007,5 and it is set to expire today.
In reviewing our 2007 decision, a divided panel of the U.S. Court of Appeals for the D.C. Circuit
deferred to the Commission’s finding that the ban was still necessary.6 However, the court also indicated
that the Commission would have difficulty justifying another renewal if cable’s market share continued to
1 See Statement of Commissioner Ajit Pai, Hearing before the Subcommittee on Communications and Technology
of the United States House of Representatives Committee on Energy and Commerce at 2 (July 10, 2012) (by
“requir[ing] periodic re-evaluation of existing regulations,” sunset clauses “ensure[] timelier decision-making and a
regulatory framework better calibrated to a dynamic communications marketplace”), available at
http://go.usa.gov/YDcJ.
2 Pub. L. No. 102-385, 106 Stat. 1460 (1992).
3 47 U.S.C. § 548(c)(5).
4 Implementation of the Cable Television Consumer Protection and Competition Act of 1992; Development of
Competition and Diversity in Video Programming Distribution: Section 628(c)(5) of the Communications Act Sunset
of Exclusive Contract Prohibition, CS Docket No. 01-290, Report and Order, 17 FCC Rcd 12124 (2002) (2002
Sunset Extension Order).
5 Implementation of the Cable Television Consumer Protection and Competition Act of 1992; Development of
Competition and Diversity in Video Programming Distribution: Section 628(c)(5) of the Communications Act:
Sunset of Exclusive Contract Prohibition; Review of the Commission’s Program Access Rules and Examination of
Programming Tying Arrangements, MB Docket Nos. 07-29, 07-198, Report and Order and Notice of Proposed
Rulemaking, 22 FCC Rcd 17791 (2007).
6 Cablevision Sys. Corp. v. FCC, 597 F.3d 1306 (D.C. Cir. 2010) (Cablevision I).
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decline.7 This is because the Cable Act predicates extension of the ban on a finding that it remainsnecessary to promote competition.8
Two decades after Congress instituted the program exclusivity ban, we are compelled by the law
and the facts to change course. When the Cable Act was enacted, 95% of MVPD subscriptions were
attributable to cable.9 When the exclusivity ban first came up for reauthorization in 2002, cable’s share of
the market had shrunk to 78%. When the ban was last extended in 2007, cable’s share of the
multichannel video programming distribution (MVPD) market had further fallen to 67%. It now rests at
just over 57%, meaning that there has been nearly a 40% decline in just twenty years.10 And more
competitive challenges are on the way, as telephone companies, over-the-top distributors, and others
continue to make inroads into the video marketplace.11 Vertical integration has diminished recently as
well. Currently, only 14% of programming networks are affiliated with cable companies, down from
35% a decade ago.12
In short, it is indisputable that competition in the video distribution market has become
substantially more vibrant over the past twenty years. I therefore believe that the exclusivity ban has
outlived its statutory purpose as well as its constitutional justification.13 The market has changed, and our
rules must follow.
Some have expressed concern that cable operators may use exclusive contracts to harm
competition and impede entry into video distribution markets. However, as cable’s market share has
fallen, cable-affiliated programmers are earning an ever-larger share of revenues from licensing content to
non-cable MVPDs. This reduces their incentives to forgo licensing fees for programming in the hope of
inducing rivals’ customers to switch providers. In short, there just won’t be a business case for many
cable-affiliated programmers to withhold content.
More significantly, exclusivity can promote competition. It can provide non-cable MVPDs with
the incentive to develop content to compete with cable, just as it enhances cable operators’ incentive to
further develop their programming. Examples involving local news programming demonstrate that
exclusive arrangements can yield greater investment in programming and more diverse content. This can
allow video distributors to differentiate their products, and thereby compete to deliver better content than
7 Id. at 1314 (“We expect that if the market continues to evolve at such a rapid pace, the Commission will soon be
able to conclude that the exclusivity prohibition is no longer necessary to preserve and protect competition and
diversity in the distribution of video programming.”).
8 See 47 U.S.C. § 548(c)(5) (“The prohibition . . . shall cease to be effective 10 years after October 5, 1992, unless
the Commission finds . . . that such prohibition continues to be necessary to preserve and protect competition and
diversity in the distribution of video programming.”).
9 See Report and Order at Appendix E.
10 See SNL Kagan, U.S. Cable Subscriber Highlights, June 2012.
11 See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, MB
Docket No. 07-269, Fourteenth Report, 27 FCC Rcd 8610, 8626–27, para. 40 (2012) (98.5% of American
consumers can choose among three or more MVPDs, in addition to traditional broadcast television stations); id. at
8627–28, para. 41 (“[S]ince the Commission’s first report on the status of competition in the market for the delivery
of video programming in 1995, almost no subscriber has fewer MVPD choices and most subscribers have more
MVPD choices.”).
12 2002 Sunset Extension Order, 17 FCC Rcd at 12131, para. 18.
13 Because the ban is no longer necessary as a means of preserving competition, it likely fails intermediate scrutiny
and thus runs afoul of the First Amendment. Cf. Cablevision I, 597 F.3d at 1311.
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their competitors. Eliminating the exclusivity ban thus can help foster a system of broader competition onservice and quality, not one limited to a game of price wars.
Another benefit of ending the ban is that it will bring parity to our regulatory treatment of
regional sports networks (RSNs). The exclusivity ban only applies to satellite-delivered RSN content,
while terrestrially-delivered RSNs are handled on a case-by-case basis. This disparity does not make any
sense; the competitive concerns raised by RSN distribution do not differ based on how signals reach
customers.
To be clear, removal of the ban does not mean abdication of our responsibility to enforce section
628 of the Communications Act.14 Even after today’s decision, MVPDs may file a complaint at the
Commission alleging that a particular exclusive contract is an unfair act that violates section 628(b).15 I
am aware of the costs (both the actual expenses of litigation and costs incurred through delay) that can be
imposed upon MVPDs during the pendency of such complaints. For this reason, I believe the
Commission must adjudicate these disputes in a timely manner. I am therefore pleased that my
colleagues agreed to adopt a six-month deadline for resolving section 628(b) complaints concerning
denials of programming.
I am mindful, too, of the special considerations applicable to RSNs. The Commission has long
recognized that many RSNs carry programming that consumers consider “must-have” and competitors
cannot replicate.16 This precedent suggests that it is appropriate to apply a rebuttable presumption that
RSN exclusivity has the “purpose or effect” of “hinder[ing] significantly or . . . prevent[ing]” a rival
MVPD from providing competitive programming within the meaning of section 628(b).17 This
presumption reverses the burden of production, not the burden of persuasion, and may ultimately reduce
litigation costs and/or deter anticompetitive behavior.18
In sum, it is time to replace our flat prohibition on exclusive programming contracts with a more
pragmatic, fact-specific adjudicatory approach. Our decision to eliminate the across-the-board ban on
such contracts brings our regulations more in line with the competitive realities of the marketplace and
has the potential to promote greater competition among cable and non-cable MVPDs. I am therefore
pleased to support the item.
14 47 U.S.C. § 548.
15 47 U.S.C. § 548(b) (“It shall be unlawful for a cable operator, a satellite cable programming vendor in which a
cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods
of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to
prevent any multichannel video programming distributor from providing satellite cable programming or satellite
broadcast programming to subscribers or consumers.”).
16 See, e.g., Review of the Commission’s Program Access Rules & Examination of Programming Tying
Arrangements, MB Docket No. 07-198, First Report and Order, 25 FCC Rcd 746, 750, para. 9 (2010).
17 47 U.S.C. § 548(b).
18 See, e.g., Antonio Bernardo et al., A Theory of Legal Presumptions, 16 J.L. ECON. & ORG. 1, 2–3 (2000) (positing
that “evidentiary rules adopted by courts—that is, initial presumptions and burdens of proof—are an important
mechanism for striking an optimal balance between” the competing inefficiencies of litigation and the types of
conduct that give rise to litigation in the first place).
146
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